When you put things like life insurance policies, IRA accounts, annuities
and 401(k) accounts in place, you are asked if you would like to name
a beneficiary. You can also put a beneficiary in place for things like
checking or savings accounts, brokerage accounts or CD accounts.
When a beneficiary designation is put in place, then the beneficiary receives
the asset at your death directly and that asset never makes it to your
will for distribution. Therefore, the provisions and wishes in your will
have no impact on the particular assets with beneficiary designations.
However, if the person you named as your beneficiary passes away before
you do, or if somehow your beneficiary designation never gets recorded
appropriately in the records accompanying your asset, or if you forget
to name a beneficiary for the asset; then the beneficiary becomes your
estate and the provisions and wishes in your will are going to control
the distribution of those assets.
If the beneficiary who you thought was going to get the specific asset
and the beneficiary under your will are the same person, the process of
getting the asset to the beneficiary may now be a bit more complex (because
now probate may be involved) but the result is going to be the same. But,
if the beneficiary for the specific asset and the beneficiary under the
will are not the same person, then the person who you thought was the
beneficiary for the specific asset will receive nothing and the beneficiary
under the will is going to receive the asset.
So what is the moral of the story – check your beneficiary designations.
Every year, request in writing, an acknowledgment from the company in
charge of the paperwork for your asset a confirmation of who they have
listed as the beneficiary for that asset. Compare their records with your
wishes and make any necessary changes before it becomes too late.