Do Beneficiary Designations Override a Will and Trust?

Estate planning is a crucial element of long-term financial success and establishing an effective succession plan. Your legacy will be impacted by the decisions you make and how you prepare your assets and accounts to transition down the line. For many people, estate planning is complicated by the availability of beneficiary designations on various accounts – both designating your trust, and outside of your estate plan to individuals through built-in beneficiary designations on titles and in accounts.

What happens when these designations conflict? You work with an estate planning attorney to put together a thorough estate plan that designates who gets what assets after you’re gone (or, in the case of a trust, at a certain point in time). However, it’s later discovered that the designation(s) in your estate plan doesn’t match designations made through account and title documents. Which designation takes precedence?

Transfer on Death Instruments or Deeds

The designations within an account or in the title of an asset are frequently referred to as “Transfer on Death Instruments or Deeds.” These designations are crucial because they actually take precedence over the contents of a will or a trust. If you have conflicting designations, the designation in the account or title will actually avoid the probate process in California if the beneficiaries are still living.

This complexity arises often because individuals might name a beneficiary when opening or updating an account, but only later develop their estate plan. This can lead to conflicts and typically does not reflect the actual intentions of the account holder. The good news is, there are ways to manage these conflicts effectively.

Use Specific, Direct Language in Your Estate Plan

To prevent confusion, it’s essential to ensure that both the designations in your estate plan and those on your accounts and titles are accurate, up-to-date, and reflective of each other. However, this isn’t always possible, and sometimes, people simply forget to make these updates.

In cases where an estate plan is established after accounts are opened or updated, it’s critical to use direct and specific language in your estate plan. Explicitly stating that the designations in your will and/or trust should override any designations made in the account or title documents can help reflect your intention that your estate plan takes precedence – but it’s not a guarantee. The best approach is to title all accounts to your trust and eliminate beneficiary designations altogether. This approach differs for retirement accounts and life insurance policies, and only applies to Certificates of Deposit, checking and savings accounts, money market accounts, and similar accounts.

Plan Your Legacy with Peace of Mind

When beneficiary designations conflict, the assets or accounts in question often end up in probate, despite efforts to avoid this process. Understanding the intricacies of these designations and being proactive in how you transfer assets and accounts is critical for avoiding complications.

At Dahl Law Group, we specialize in guiding our clients through the complexities of estate planning. We help you make informed choices that ensure your legacy is established and transferred according to your wishes. With our team of experienced attorneys, you can plan your legacy with peace of mind, knowing that your estate will be handled exactly as you intend. Contact us to begin shaping and securing your legacy today.

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Dahl Law Group

At Dahl Law Group, we’re not just a law firm. We’re your trusted advisor for your business and family from beginning to end. As your family and business grow, we will be there by your side. Our passion is providing you with peace of mind and protection through personalized estate and business planning.

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