Most people think the will decides who gets what. For a lot of what families actually own, it doesn’t.
Your life insurance, your 401(k), your IRA and many bank accounts usually go to whoever is named on a form you may have filled out decades ago. That form is called a beneficiary designation. In most cases, it controls, even if your will says something different.
This guide explains why, and how to check yours.
Two different paths for your things
When someone passes, what they owned generally travels one of two ways.
Through the will. Things in the person’s name alone, with no beneficiary named, usually go through the will and the probate court. A house in one name, a car, a checking account with no beneficiary, personal belongings.
Around the will. Things with a named beneficiary, or owned jointly, usually go straight to that person. The will isn’t consulted. These typically include:
- Life insurance, paid to the beneficiary named on the policy
- Workplace retirement plans, such as a 401(k) or 403(b)
- IRAs
- Pensions with a survivor option
- Bank accounts marked “payable on death”
- Brokerage accounts marked “transfer on death”
- Jointly owned accounts that pass to the surviving owner
For many Georgia families, the accounts that go around the will are worth more than everything that goes through it.
The mistakes we see most
These come up again and again when families sit down with us.
The ex-spouse is still on the form
Someone marries, names their spouse on the 401(k), divorces, remarries, and never updates the form. They update the will. They tell everyone what they want. But the plan administrator generally pays whoever is named on the form it has on file.
Don’t count on a divorce, a new will or a conversation with the kids to fix an outdated form. The fix is the form itself.
Someone on the form has already passed
If the only beneficiary named has passed and there’s no backup, the money may end up going to the estate. That can put it through probate, which takes longer and is exactly what the form was supposed to avoid.
There’s no backup beneficiary
Most forms have a spot for a primary beneficiary and a contingent, or backup, beneficiary. Leaving the backup blank is one of the most common gaps we find.
A minor child is named directly
Insurance companies and plan administrators usually can’t hand money directly to a child under 18. If a minor is named, the money may wait on a court process before anyone can use it. This is a good question to bring to a Georgia-licensed attorney if you have young grandchildren in mind.
“My estate” is the beneficiary
Naming your estate sends the money back through the will and probate. Sometimes there’s a reason for it. Often it was just the easiest box to check.
The will and the forms disagree
Your will might split everything equally among three children. But if one child is named on the life insurance and another on the IRA, the result may be anything but equal. The will can’t reach back and rebalance it.
How to check your beneficiary forms
You don’t need to change anything today. You just need to know what’s on file.
- List every account that might have a beneficiary. Life insurance, each retirement account, each pension, and each bank or brokerage account.
- Call or log in to each one and ask: “Who is listed as my primary beneficiary, and who is my contingent beneficiary?” Write down exactly what they say.
- Compare the answers to what you want. And to what your will says.
- Update any that are wrong using that company’s own form. A letter or a note in your will won’t do it.
- Keep a copy of each confirmation with your other papers, so your family knows what was done.
Some workplace retirement plans have their own rules about a spouse, such as requiring the spouse’s written consent to name someone else. The plan administrator can tell you what applies to yours.
Our guide on how to inventory your accounts shows how to put all of this on one page for your family.
Where your will still matters
None of this means the will doesn’t matter. It does. It names who handles your estate, who receives what’s in your name alone, and who you’d want to raise minor children. Georgia families without one leave those questions to the probate court.
The point is that the will and the beneficiary forms need to tell the same story. If you’re not sure what a will or trust would do for your situation, see will vs. trust in Georgia, and bring those questions to a Georgia-licensed attorney.
How the Assist Program helps
Leaf Cremation has served more than 5,000 Georgia families. We’re the ones at the table after a loss, and the outdated beneficiary form is one of the hardest surprises a family can get.
The Assist Program is organizing help, before and after a loss. Before, we sit down with you, list every account, and help you confirm the beneficiary on each one is current and correct. We don’t tell you who to name. That’s your decision. We make sure the paperwork matches it. If something like a will or power of attorney is missing, we help you get it done with a Georgia-licensed attorney. See how we get you organized.
After a loss, a dedicated Family Care Advisor files the life insurance and benefit claims for your family and handles the accounts until everything is finished.
It pairs naturally with burial insurance, a small whole life insurance policy that pays your family in days. Burial insurance answers “how will it be paid for?” The Assist Program answers “who handles everything else?” You can read more about burial insurance or the Assist Program.
Get help from the Assist Program
If you’d like help checking your beneficiary forms, or a parent’s, leave your name and number below. Someone from the Assist Program will call you back.