The single line on an account form that overrides the will - and the commonest reason an estate plan does not do what the family expected.
Many of the largest assets people own do not pass under a will and never enter probate. Life insurance, retirement accounts, annuities, and bank or brokerage accounts registered as payable-on-death or transfer-on-death pass directly to whoever is named on the account, by contract, on production of a death certificate. The will is not consulted. Where the two conflict, the designation ordinarily wins, and the conflict is usually invisible until the death has happened.
How these are structured matters more than the length of the form suggests. A primary beneficiary takes; a contingent beneficiary takes only if no primary survives. Where a designation names people "per stirpes", a deceased child's share generally passes to that child's own children, whereas the common default is that it is divided among the surviving named beneficiaries instead - a difference that decides whether grandchildren inherit at all. Naming a minor directly is a frequent mistake, because an insurer will not pay a child and a court-supervised guardianship of the money usually results; a trust for the child is the ordinary alternative. Naming "my estate" is another, because it converts an asset that would have avoided probate into one that does not and, for retirement accounts, can shorten the period over which the money must be withdrawn and taxed.
The recurring failures follow a pattern: a designation made at the start of a job and never revisited; a divorce after which the former spouse remains named; a beneficiary who dies before the account holder with no contingent named; a rollover to a new provider that silently reset the designation to the plan default; a form completed but never acknowledged by the institution. Some states automatically revoke a designation in favour of a former spouse on divorce - but that state rule is preempted for employer plans governed by federal law, where the plan document controls and the former spouse is paid. Employer retirement plans additionally require spousal consent in writing before a married participant may name someone else, and a designation made without it may be invalid.
Because the money passes by contract rather than by inheritance, it is generally beyond the reach of the will, is usually not available to pay the estate's debts or the executor's expenses, and can leave an estate cash-poor while a single named beneficiary receives everything. That is the mechanism behind most "the will said equally, and it was not" outcomes - the will was obeyed exactly, and it simply did not govern the assets that mattered.
This is the estate planning task that repays a spare hour more than any other, and it does not require a lawyer to start: list every life insurance policy, retirement account, annuity and bank or brokerage account, log in or call, and confirm in writing who is currently named as primary and contingent on each. Do it after any marriage, divorce, birth or death, and again after any employer or provider change, because rollovers are where designations are most often lost. Get advice before naming a minor, a person with a disability receiving means-tested benefits, a trust, or your estate; before completing plan paperwork as a married participant naming anyone other than a spouse; and where a divorce decree requires a particular designation, because the decree alone frequently does not change the account. After a death, if you believe a designation is wrong - made under pressure, after incapacity, or contrary to a court order - act quickly and before the funds are paid out, since recovering money already distributed is a far harder case than stopping payment.
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