Palm Springs Law Blog

Wednesday, July 22, 2020

Designated Beneficiaries or Your Will: What Takes Priority?

As you make a living, you likely contribute a percentage of your income each paycheck to your retirement fund. If you work for yourself, you (hopefully) put away an amount of money for the same each month. As a result, your retirement ends up being one of your largest assets.

While most people worry that they haven’t saved enough money to comfortably retire, others worry about what may happen to their retirement assets should they not use them all prior to passing. This begs the question of what happens to your retirement funds in the probate process?

While most assets go through the probate process, not all of them do. Assets that go through probate include:

  • Business interests or stocks;
  • Bank accounts;
  • Tangible personal property; and
  • Most real estate properties/vehicles;

Some assets go to beneficiaries and do not go through the probate process. Retirement benefits are this type of asset.

Beneficiary Designations Trump Your Will

Often retirement benefits include a beneficiary designation so that your assets will transfer to the designated beneficiary or beneficiaries upon your death. This is usually applicable to:

  • 401(k)s;
  • 403(b)s;
  • Pensions;
  • Individual retirement accounts (IRAs);
  • Life insurance plans;
  • Payable-on-death accounts;
  • Real properties with a “Transfer on Death” Deed; and
  • Real properties held in joint tenancy with a living survivor.

During probate, designated beneficiaries take priority over your Will. When your beneficiary designations conflict with what is in your Will, your beneficiary designations will reign supreme. For example, if your Will now states that your ex-spouse is not to receive any of your retirement assets, but you do not change him or her as a designated beneficiary on your retirement account itself, he or she may still be able to obtain those assets.

If you fail to designate any beneficiaries or if your designated beneficiary predeceases you and you do not have a contingent beneficiary, your retirement account will likely be subject to probate.

It is for this reason that it is imperative that your loved ones understand which assets are not intended to go through probate and you should ensure that your estate planning documents align with these wishes.

Heritage Legal, PC Helps Those in California to with Their Comprehensive Estate Planning Needs

To ensure that you and your loved ones are protected when you pass and that your retirement assets go to the individuals you desire, it is wise to consult with a knowledgeable and experienced California estate planning attorney. They can work to ensure that your wishes will be carried out in the manner in which you desire.

At Heritage Legal, PC, we understand the importance of protecting the very things that you care about the most. We can help you to establish a comprehensive estate plan that meets your needs and the needs of your family. To learn more or to schedule a free consultation, contact us today!

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