How Do Retirement Accounts and Life Insurance Policies Get Distributed to Heirs?

When you set up retirement accounts or open a life insurance policy, those account managers will send you a beneficiary designation form. The purpose of this is to allow you to name who want to receive those assets if something happens to you. You might have previously tried to name this in your will, but that’s not accomplishing the purpose.

Wills and beneficiary designations share something in common, which is that you can use both of these to determine who receives assets and money from your estate after you pass away. However, a will and beneficiary designations are not the same things, and you should approach these with careful consideration about your overall estate plan.

An estate planning lawyer may be one of the professionals that you hire to assist you with this process. First of all, specific companies require that you file a beneficiary designation for their products. This includes life insurance policies and retirement accounts.

Even if you name in your will that you wish your retirement account to go to someone specifically, the company is obligated to follow your beneficiary designations you file with them. Secondly, a beneficiary designation is for one asset only, referring to things like brokerage accounts, retirement accounts, annuities, or life insurance policies. Your will, however, describes your entire probate estate. Third, beneficiary designations can override intention stated in your will.

Finally, wills are not necessary for beneficiary designations to kick into action. Instead, when your beneficiary designation has been filed directly with the company in question, that enables the company to effectively pass on those assets to your named loved ones in a timely manner.

Our California estate planning attorneys can help you list all the assets included in your probate and non-probate estate. Contact us today to learn more and to start that process.








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