A common question we are asked by clients when a loved one passes is, “Does the Will or Trust overrides the beneficiary designation on accounts?” In the realm of estate planning, Wills, trusts and beneficiary designations are commonly used tools to ensure the smooth transfer of assets upon an individual’s passing. It is essential to understand how these instruments interact and whether a Will or trust overrides a designated beneficiary on a bank account.
To begin, let’s clarify the roles of Wills, trusts and beneficiary designations.
- A Will is a legal document that states your intentions for distribution of your assets upon your death.
- A trust is a legal entity created to hold and manage assets for the benefit of one or more beneficiaries. It allows the grantor, the person creating the trust, to specify how the assets should be distributed and managed during their lifetime and after their passing.
- A beneficiary designation is the person or entity who will receive the assets held in certain accounts, such as bank accounts, retirement accounts, or life insurance policies, upon the account owner’s death.
The designation of a beneficiary on a bank account generally takes precedence over the instructions outlined in a Will or trust. When a bank account has a designated beneficiary, the account assets will be transferred directly to the named beneficiary upon the account owner’s death, without going through the probate process. This is known as a “payable on death” or “POD” account.
The advantage of a POD account is its simplicity and efficiency in transferring assets directly to the beneficiary, bypassing probate. It is worth noting that the beneficiary designation on a POD account supersedes any conflicting instructions in a Will or trust. Therefore, if a Will or trust specifies different beneficiaries or distribution instructions for the same account, the beneficiary designation will prevail.
It’s important to emphasize that proper estate planning and coordination between Wills, trusts and beneficiary designations are crucial to ensure that assets are distributed according to the account owner’s wishes. It is advisable to consult with an experienced estate planning attorney who can provide guidance on creating or updating Wills, trusts, designating beneficiaries, and navigating the legal intricacies to ensure your estate plan aligns with your intentions.
At Grissom Law, LLC, we work with individuals and couples to create a comprehensive plan that aligns with your wishes. Call us at 678.781.9230 to schedule an appointment to meet with us to begin your estate planning.
Disclaimer
This Blog/Web Site is made available for educational purposes only as well as to give you general information and a general understanding of the law, not to provide legal advice. By using this blog site you understand that there is no attorney client relationship between you and Grissom Law, LLC.