Beneficiary vs. Will: Which One Wins? (Why Your Estate Plan Might Fail)

When planning your estate, most people assume their Last Will and Testament is the ultimate authority on who inherits their assets. You might believe that if you write in your Will that your assets should be split evenly among your children, that is exactly what will happen.

However, there is a specific legal designation that outweighs your Will. If you do not understand the hierarchy of estate planning assets, your written instructions could end up being useless.

Does a Will Override a Beneficiary Designation?

The short answer is no.

In estate planning, a Beneficiary Designation (often called Pay-on-Death or POD) on a specific asset outweighs anything you have written in your Will.

When you designate a specific person to receive an asset—such as a bank account, financial account, or even a home in Florida via a "Lady bird deed"—that specific designation takes priority.

Key Takeaway: If your Will says an account should be split between three people, but the bank account’s beneficiary form lists only one person, the beneficiary form wins. Your Will takes a "backseat" and cannot override it.

Why Alignment is Critical for Your Estate Plan

For an estate plan to work, all your "arrows" must point in the same direction. This means your asset designations must align perfectly with the instructions in your Will. If they don't, the specific asset designation prevails, often leading to unintended results.

1. The "Percentage" Problem

It is common to write a Will that divides assets by percentage (e.g., 33% to Child A, 33% to Child B, and 33% to a Friend).

However, if you list specific beneficiaries on your financial accounts, those designations might not match your Will.

• The Scenario: You want your estate split three ways, but your bank only allowed you to list one beneficiary (Child A) on your savings account.

• The Outcome: Child A receives 100% of that account. The Will cannot force them to share it with Child B or the Friend.

2. The Dangers of "Joint Owners"

A common mistake is adding a child or friend as a "Joint Owner" to a bank account for convenience (e.g., to help pay bills or medical expenses).

This creates three major problems that a Will cannot fix:

1. Immediate Access: The joint owner has immediate access to the funds and can withdraw them while you are alive.

2. Creditor Risk: The money becomes a joint asset. If the joint owner has a judgment against them or debt issues, your money could be subject to their creditors.

3. Disinheritance: When you pass away, the account transfers 100% to the surviving joint owner. Even if your Will states that the account should be split among all your children, the joint owner is not legally required to split it.

How to Fix the Conflict Between Your Will and Your Assets

To ensure your plan goes as intended, you must be mindful of how every single asset is titled.

• Audit Your Accounts: Make a list of everything you own (bank accounts, financial accounts, real estate).

• Verify Beneficiaries: Check exactly who is listed as the POD or beneficiary on each institution's forms.

• Align Directions: Ensure the names and percentages on these forms match your Will exactly.

• Consider a Trust: If a financial institution limits how many beneficiaries you can list, you may need to speak with an attorney about creating a Trust to ensure your wishes are followed.

A Special Note for Florida Residents

In Florida, you can name a beneficiary on your primary residence using a Lady Bird Deed. Just like a bank account, this deed outweighs the Will. If the deed says the house goes to one person, but your Will says it goes to another, the deed prevails.

Frequently Asked Questions (FAQ)

Does a beneficiary on a bank account override a Will? Yes. The beneficiary designation on the financial account takes precedence over the instructions in a Last Will and Testament.

What happens to a joint account when one owner dies? The account generally passes 100% to the surviving joint owner. The deceased person's Will does not control this asset.

Can I fix a beneficiary mistake with my Will? No. You must change the beneficiary designation form with the specific institution (bank, insurance company, etc.) to ensure it matches your wishes.

If you are in Florida and want to ensure your Will and asset designations are aligned correctly, contact atCause Law Office (The Non-Stuffy Attorneys), and book your Free Consultation.