Why Beneficiary Designations Can Override Your Will
Henry Supinski, ChFC® · 4 min read · April 2026
Most people assume their will controls where their money goes when they die. For a surprising number of their largest accounts, it doesn't. IRAs, 401(k)s, life insurance policies, and annuities all pass by beneficiary designation — completely outside of probate, and completely regardless of what your will says.
What Passes Outside Your Will
When you opened your 401(k), you filled out a beneficiary form. Same with your IRA, your life insurance policy, and possibly your brokerage accounts. Those designations are legally binding contracts between you and the financial institution — and they supersede your will, your trust, and anything else in your estate plan.
This means if your will says "everything goes to my spouse" but your IRA beneficiary form still lists your ex-spouse from 15 years ago, your ex-spouse gets the IRA. It doesn't matter what the will says. It doesn't matter what you intended. The beneficiary form wins.
Why This Happens More Than You'd Think
Beneficiary designations are easy to forget. You fill them out when you open an account and never think about them again. But life changes: marriages, divorces, births, deaths, estrangements. Your estate plan evolves — but the beneficiary forms sitting in a filing cabinet at Fidelity or Vanguard don't update themselves.
We see this in almost every new client engagement. Someone has a well-drafted will and a properly funded trust — but their retirement accounts, which are often the largest assets in their estate, are pointed somewhere completely different.
The Tax Consequences Can Be Enormous
Beneficiary designations don't just control who gets the money — they control how it's taxed. A surviving spouse who inherits an IRA can roll it into their own IRA and continue deferring taxes. A non-spouse beneficiary must draw down the entire account within 10 years under the SECURE Act, potentially creating massive tax liability in the process.
Naming a trust as a beneficiary — which sounds like it should simplify things — can actually accelerate taxes if the trust isn't drafted correctly. Trust tax rates hit the top bracket at just $15,200 of income, compared to over $600,000 for a married couple filing jointly. The wrong structure can cost your heirs tens of thousands in unnecessary taxes.
What About Per Stirpes vs. Per Capita?
Most beneficiary forms let you choose how the money flows if your primary beneficiary dies before you. "Per stirpes" means their share passes to their children. "Per capita" means it's split equally among surviving beneficiaries. Choosing the wrong one — or not choosing at all — can create results that directly contradict your estate plan.
The Fix Is Simple — But It Requires Coordination
At least once a year, pull every beneficiary designation you have: 401(k), IRA, Roth IRA, life insurance, annuities, HSA, 529 plans, and any transfer-on-death (TOD) brokerage accounts. Compare them against your current estate plan. Make sure they reflect your current life — not the one you had when you opened the account.
This is one of the first things we do with every new client at Blackshire. It's not glamorous. It's not complicated. But it's one of the highest-impact planning moves you can make — because getting it wrong is permanent and irreversible.