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Beneficiary designations and bequests

On Behalf of | Oct 31, 2016 | Estate Planning

To ensure that ownership of certain assets are transferred according to their final wishes, Florida residents should know that there is a distinction between beneficiary designations for a financial account and a bequest detailed in a will. Regardless of the language of a will, beneficiary designations supersede it.

There are many types of financial assets that allow the account holder to name a beneficiary. They include IRAs, bank and brokerage accounts, retirement savings plans that are sponsored by employers, individual stocks and bonds, mutual funds, insurance policies and United States savings bonds. Upon the death of the account holder, the contents of the account become the property of the individual named as beneficiary.

Ones of the advantages of being able to name a beneficiary is that it allows the assets to avoid having to undergo probate, which can be an expensive and lengthy procedure. However, because assets with designated beneficiaries are not classified as probate assets, they override any instructions regarding the assets that are detailed in the will.

This may result in individuals receiving assets that the original owners no longer had a desire to give them or the assets not being allocated in the proportions that the decedent wanted. It can result in there not being enough funds to execute the bequests detailed in the will. Failing to name beneficiaries or not updating certain forms when a beneficiary dies can cause similar confusion.

An estate planning attorney may advise clients on how to ensure that the treatment of certain assets detailed in a will correspond with the beneficiaries designations for those assets. Clients may also be encouraged to periodically review and update their beneficiary designations, especially when significant life events take place.


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