The short answer
A crucial and often-overlooked fact is that beneficiary designations on accounts like life insurance, IRAs, and retirement plans override your will. That means an outdated or incorrect designation can send money to the wrong person no matter what your will says. The biggest mistakes are naming an ex-spouse or deceased person, leaving designations blank, naming a minor directly, and never updating them after major life events. Reviewing and updating your beneficiaries keeps your money going where you intend. This is educational information, not legal advice.
So beneficiary designations override your will, so outdated or incorrect ones can send money to the wrong person regardless of your will.
The mistakes to avoid
Common errors include failing to update beneficiaries after a divorce, death, or new child, which can leave an ex-spouse or deceased person named; leaving a designation blank, which can send assets through probate; and naming a minor child directly, which can freeze the money in a court process. Because these designations control the money, keeping them current is essential. Our guide to why beneficiary designations beat your will explains this, and our guide to naming a minor as beneficiary covers that specific pitfall.
The theme is keeping designations current and appropriate, since they, not your will, control these assets.
How to get it right
Review your beneficiary designations on all accounts periodically and after every major life event, name both primary and contingent beneficiaries, and use a trust or custodian rather than naming a minor directly. Coordinate your designations with your overall estate plan so nothing conflicts. Because the rules interact with estate planning, an attorney can help. This is educational information; confirm your specifics with a professional.
The takeaway: because beneficiary designations override your will, review and update them after major life events, name contingents, and avoid naming a minor directly.
Frequently Asked Questions
Do beneficiary designations override a will?
Yes. Designations on accounts like life insurance, IRAs, and retirement plans override your will, so an outdated or incorrect one can send money to the wrong person regardless of what your will says.
What are common beneficiary mistakes?
Leaving an ex-spouse or deceased person named after a life change, leaving a designation blank so assets go through probate, and naming a minor child directly, which can freeze the money in court.
How do I fix beneficiary designation mistakes?
Review designations on all accounts after every major life event, name primary and contingent beneficiaries, use a trust or custodian instead of naming a minor directly, and coordinate with your estate plan.
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