Why Beneficiary Designations Override Everything
Beneficiary designations are contracts between you and the financial institution. They take priority over anything in your will or trust. If your will says your daughter inherits your IRA but the designation names your ex-spouse, your ex-spouse gets it. The will does not matter for that asset.
Common Beneficiary Designation Mistakes
- Naming an ex-spouse who was never updated after divorce
- Naming a minor child directly (creating court-supervised guardianship of the funds)
- Leaving designations blank (forcing the asset through probate)
- Failing to coordinate designations with your trust's distribution plan
Best Practices
Review beneficiary designations every time you update your estate plan. Also review them after major life events like marriage, divorce, birth, or death. At RJP, we help clients coordinate all designations with their trust.
Trust as IRA Beneficiary: Full Guide
Should your trust be the beneficiary of your IRA or 401(k)? See our guide: Should Your Trust Be the Beneficiary of Your IRA or 401(k)?.