This is one of the most common misconceptions out there in the world of estate planning: beneficiary designations and will (and how they do or DO NOT change or impact each other).
Here is a great video on this topic!
For the transcript of this video, read on!!
Hey! Good morning. This is Wills on Wednesday! I had to stop myself for a moment this morning because I can’t believe it’s already Wednesday this week. I am attorney Amy Refeca here at Atlanta Wills and Trusts Law Group. Today we’re going to talk beneficiary designations vs. wills. Just what is the difference? How does one impact the other or do they impact at all? So thank you for joining me this morning. Today is about information about estate planning and specifically we’re going to talk about does your will have any impact on beneficiary designations and do beneficiary designations have any impact on your will? And frankly the answer is no. They are entirely separate things and they really don’t have any impact on each other. So let me give you a great example to put it into like real life words and real life things. So a client comes in and says I have a new life insurance policy and I have named my daughter Suzy to receive 100% of this policy and then she proceeds to tell me that she would like to change her will and make sure that that same policy that she purchased and named Suzy as a beneficiary of she wants to put that same policy in her will and say that really Suzy who was named as the beneficiary needs to also give her daughter Sam or Samantha half of that life insurance policy. Well Suzy’s getting the entire policy because your will has no impact whatsoever on a beneficiary designation. They are separate ways to pass something on when you pass away. So there are several ways that you actually pass something on when you pass away. So if you think of it in terms of if you are dead you cannot own something. So in simple terms. And you have to pass your things your property and your money on to someone else. It has to go and it can go to someone else in a few different ways. One of those ways is by beneficiary designation. So if you have an account like an investment account or a life insurance policy or a retirement account you should name a beneficiary of that account. And a beneficiary is simply someone who is set to benefit and receive at death that money that item. So again a beneficiary designation should be named; and typically you should be able to name a primary beneficiary (meaning someone to receive it at the first level) and if that person is passed away when you pass away you typically have a chance to name a second person. So that it’s sort of like a safety net under your first person that you’ve named. So you should always, always double check your beneficiary designations so that it named to the person or individuals or charities or entities that you want that money to go to. You should always have a backup, or a secondary or contingent beneficiary designation. The other way you pass items on real property on or money on is through your will. Again beneficiary designations have no impact on what you put in your will and what you put in your will has no impact on beneficiary designations. And so you need to make sure that you understand that overall your estate, which is what all of your things and your money and your property is called when you die will, pass in different ways. And those ways tend to not have any impact on each other. So again you should always look at your beneficiary designations and make sure that they are up to date and you have named the people that you want to receive that piece of property or money. You should always look at your will, as well. And again you need to understand that those two things tend to not have anything to do with each other and that what you say in your will, will not change your beneficiary designations and what you put in your beneficiary designations will not change your will. This is Amy Refeca here in Atlanta Wills and Trusts Law Group I hope you have a wonderful Wednesday.