When most people think about estate planning, they picture wills, trusts, and maybe a conversation with an attorney. But there’s one piece of the puzzle that often gets overlooked—and it can completely override everything else you’ve put in place – beneficiary designations.
Beneficiary Designations
Beneficiary designations are the names you list on things like life insurance policies, retirement accounts, and certain financial assets. They determine who receives those funds upon your death. Seems simple enough, right? But here’s the part many people don’t realize – beneficiary designations take priority over your will. That means if your will says one thing, but your beneficiary form says another, the beneficiary form wins every time.
And that’s where problems can start.
Life changes constantly. People get married, divorced, have children, lose loved ones, or experience shifts in relationships. But those beneficiary forms don’t update themselves. If you haven’t looked at them in years, there’s a real chance they no longer reflect what you want.
What Happens If You Don’t Name a Beneficiary?
Failing to name a beneficiary can be just as problematic as naming the wrong one—sometimes even more so. If an account like an IRA or a life insurance policy has no beneficiary on file, the asset typically becomes part of your probate estate.
That can lead to several unintended consequences:
- Probate delays: Instead of passing directly to a loved one, the asset may be tied up in probate for months—or even longer—before anyone can access it.
- Increased costs: Probate often comes with court fees, legal expenses, and administrative costs that reduce what ultimately goes to your heirs.
- Loss of tax advantages: Certain assets, especially retirement accounts like IRAs, receive favorable tax treatment when passed directly to a named beneficiary. If the account ends up in your estate, those tax benefits may be limited or lost entirely.
- Distribution that conflicts with your wishes: State law—not your personal intentions—will determine who receives the asset if no beneficiary is named. That could mean the money goes to people you didn’t intend or is divided in ways you would not have chosen.
For life insurance in particular, the purpose of the policy is often to provide quick financial support to loved ones after a death. Without a beneficiary, that support may be delayed at the exact moment it’s needed most.
A Small Step That Makes a Big Difference
The good news is that checking beneficiary designations is easy. Most financial institutions let you review and update them online. It takes just a few minutes, but the impact is huge. Keeping these designations current ensures your assets go exactly where you intend, avoids unnecessary probate, and minimizes confusion, delays, and potential conflict among your loved ones.
Think of it as a small task with big consequences. A quick review today can create clarity, protect tax benefits, and spare your family from needless complications down the road.
If it’s been a while—or if you’re not sure whether all your accounts have beneficiaries listed—it’s worth taking the time to check. It’s one of the simplest and most important steps you can take to make sure your planning truly reflects your wishes.
Founded by a nurse attorney and with offices in Acton, Andover, and Sudbury, Massachusetts, Generations Law Group helps families navigate the complex areas of estate planning and elder law to inform and protect loved ones of every generation.
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