Understanding Beneficiary Designations
Why They Can Override Your Will or Trust
Beneficiary designations play a major role in how your accounts transfer after you pass away, yet many people overlook how these designations actually work.
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Estate Planning Series → Phase 1 Article 5 of 5
At a Glance
Introduction: Beneficiary Designations
Beneficiary designations determine who receives certain accounts instantly when you pass away — outside probate and sometimes even outside your will or trust.
You should review your designations because:
This article explains what beneficiary designations do, which accounts they affect, and how to set them correctly.
What Beneficiary Designations Actually Do
A beneficiary designation is a legal instruction you give directly to a financial institution stating who should receive your:
Key point: Beneficiary designations bypass your will and your trust unless you intentionally name the trust itself as the beneficiary.
When you pass away, the institution transfers the asset directly to the beneficiary—no probate, no court involvement. This is where many plans quietly break.
FREE DOWNLOAD
📘 Beneficiary Check-Up Toolkit
The Beneficiary Check-Up Toolkit helps you confirm — in writing — whether your account designations actually match your intentions. View resource →
Types of Beneficiaries
Accounts That Should Always Have Updated Beneficiaries Designations
What Happens If You Don’t Add a Beneficiary
If you leave a beneficiary blank:
Worst-case scenario:
Your ex-spouse or someone you removed from your will still gets the asset if they remain named on the account. This happens more often than most people realize.
⚠️ Many families believe updating a will updates beneficiaries—it does not.
When Your Trust Should Be the Beneficiary
There are times when naming your trust may the smarter route:
But caution: Retirement accounts have special tax rules. Consult a professional before naming a trust as beneficiary.
How Often Should You Review Beneficiary Designations?
Review them:
Also confirm your full legal name and your beneficiaries’ names are correct and spelled properly. Financial institutions still use whatever is on file — even outdated or misspelled names.
Quick Checklist You Can Use Today
Update or confirm beneficiaries on:
Verify each account has:
This 20-minute exercise can prevent years of legal problems.
🛠️ Downloadable Resources
Start with one or two of these simple tools which are designed to help you feel informed, empowered, and ready to take meaningful next steps.
FREE DOWNLOAD
📘 Beneficiary Check-Up Toolkit
A guided worksheet to help you confirm — in writing — who is listed on each account and whether those designations match your wishes. View resource →
Looking for more estate planning tools?
Explore the full collection on our Estate Planning Resources page.
Next Up: Move into Phase 2: Trusts, Strategy & Asset Protection
Now that you’ve completed Phase 1, move into Phase 2 which explains how trusts work, why families often choose them, and how to properly fund, structure, and maintain them to avoid common and expensive mistakes. This phase moves readers from basic understanding into practical, action-oriented planning.
🔍 External Resources & Related Articles
Explore trusted, expert sources or related articles for deeper guidance on the topics covered in this phase.
📚 Trusted External Resources
These organizations provide clear, introductory guidance on estate planning concepts, documents, and decision-making. Their resource hubs are designed for broad learning and ongoing exploration.
🌐 Fidelity — Estate Planning Basics
🌐 Consumer Financial Protection Bureau (CFPB) (.gov) — Managing Someone Else’s Money & Planning Ahead
🌐 FINRED (.gov) – An Introduction to Estate Planning
🌐 AARP — Estate Planning Resources
NOTE: These links are provided for additional education and exploration.
🎯 All Phase 1 Articles
Learn how foundational estate planning works, which tools protect your family, and how to avoid the costly consequences of doing nothing.
📘 Estate Planning 101: Protecting What Matters Most
📘 Do I Need a Will, a Trust, or Both?
📘 What Happens If You Do Nothing?
📘 Why You Still Need a Will (Even with a Trust)
📘 Understanding Beneficiary Designations
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About the Author
Written by Tonya Harris, founder of Elevated Sand. Tonya creates culturally grounded financial and digital education that helps people understand complex topics and make informed decisions for the future.
Disclaimer: Information is for educational purposes only and should not be considered legal or financial advice. Estate planning involves complex legal and tax considerations. You should consult a qualified estate planning attorney to determine the best approach for your situation and ensure compliance with your state’s laws.