Your last will and testament describes who should receive your property after you die. However, your will may not cover every single asset you own. You may direct a particular account or financial plan to go to someone, only for another individual to claim it.
This situation is often the case if you try to use your will to determine the fate of accounts that have beneficiary designations.
How beneficiary designations work
A beneficiary designation names the individual who will receive an asset upon the death of the owner. This designation is specific to each asset, and the entity that holds the asset manages it. For example, when you purchase a life insurance policy, the insurance company will require you to fill out a beneficiary designation form to specify who will acquire the payout of the policy.
Why designations override wills
Estate law does not consider assets with a beneficiary designation part of the probate estate, which your will has authority over. Instead, these assets transfer directly to the named beneficiary, regardless of what your will states.
For example, if your will stipulates that all your assets should go to your spouse, but you have a retirement account with your children named as the beneficiaries, the retirement account assets will distribute to your children, not your spouse, upon your death.
An executor cannot override a beneficiary designation unless specifically ordered to do so by a court. The legal duty of an executor is to carry out the wishes expressed in the will, which does not include assets with a beneficiary designation.
Why a will still matters
A will remains important since it covers everything without a beneficiary designation. However, it may still dictate what happens to an asset with an assigned beneficiary if the person designated on the asset dies before you do. If there is no backup beneficiary, the asset will likely go to your probate estate. Your will may describe what to do with any asset that goes into your estate.
Wills can establish many of your estate wishes for your family and others. However, a will must work in concert with other estate planning methods that work independently to distribute assets.