When most people think about estate planning, the first thing that comes to mind is a Will. And for good reason: a Will is a cornerstone of any estate plan. It’s the document that outlines how you want your assets distributed after your death, who should care for your minor children, and even who will settle your estate.
But here’s where things get tricky—many people assume that once they’ve written a Will, everything they own will be passed on according to its instructions. Unfortunately, that’s not always true.
Your Will Doesn’t Control Everything
Certain types of assets bypass your Will entirely, no matter what it says. These include:
- Retirement accounts (like IRAs and 401(k)s)
- Life insurance policies
- Annuities
- Payable-on-death (POD) or transfer-on-death (TOD) accounts
- Jointly owned property with rights of survivorship
What all of these have in common is that they are governed by contract law, not probate law. When you set up one of these accounts, you’re usually asked to name a beneficiary—the person or people who should receive the asset when you die. This beneficiary designation acts as a binding contract between you and the financial institution.
Let’s say you have a Will that says your daughter should inherit everything, but your IRA beneficiary form, filled out years ago, lists your brother as the beneficiary. If you pass away without updating that form, your brother—not your daughter—will receive the IRA. It doesn’t matter what your Will says. The IRA custodian is legally required to follow the beneficiary designation on file.
What You Can Do About It
The good news? This is easy to fix—if you know to look out for it. Here are some steps to make sure your estate plan is airtight:
- Review your beneficiaries regularly. Life changes—so should your beneficiary forms. Review them after major life events like marriage, divorce, births, or deaths in the family.
- Coordinate your Will and your beneficiary designations. Think of them as parts of the same team. One doesn’t automatically cover for the other.
- Work with a professional. A financial advisor or board-certified estate planning attorney can help you make sure everything aligns, and nothing slips through the cracks.
In general, it is essential to work with a board-certified estate planning attorney when creating your estate plan. While there may be other, less expensive options available—such as online templates or non-specialized legal services—these alternatives often lack the comprehensive guidance and legal precision needed to ensure your wishes are fully protected and your assets are distributed according to your intentions.
Help your friends, family, and colleagues avoid common pitfalls—share this blog and help them protect what matters most.
PAST PERFORMANCE IS NOT A GUARANTEE OF CURRENT OR FUTURE RESULTS. Examples of historical information included in this presentation do not, nor are they intended to, constitute a promise of similar future results. Specific client portfolio allocations, risks and returns can and may deviate from these examples depending on accounts and types of investments available through each account. Future market views by WJ Interests, LLC may vary significantly from the historical examples presented herein and no one receiving this summary should assume that WJ Interests, LLC will be able to replicate successful views in the future.
