Wondering if a will overrides a beneficiary on a bank account? Generally, if the will conflicts with the beneficiary on a bank account, the banking beneficiary designation takes precedence.
Having a beneficiary on a bank account has many advantages: They’ll be able to take control of the funds shortly after your passing and avoid the lengthy and sometimes costly probate process. While it’s common to be asked to name a beneficiary on other investment accounts like an individual retirement account (IRA), brokerage account, or a life insurance policy, it’s equally possible with a bank account.
This has advantages and disadvantages. The advantage is the simplicity of the transfer of funds and nearly immediate access without additional costs to the beneficiary. The disadvantage is that if the beneficiary designation conflicts with your will, it can cause conflicts between heirs or delay the probate process.
What does it mean to be a beneficiary on a bank account?
Do bank accounts have beneficiaries? Yes! A banking beneficiary on an account is someone you designate to benefit from or take control of the account after you die. You can name beneficiaries for many types of accounts, including investment accounts, mutual funds, annuities, insurance policies, and bank accounts. Usually, you’ll have to fill out a form at your bank to designate a beneficiary. The bank account beneficiary becomes the new owner of the bank account upon your death.
What does it mean to be in someone’s will?
A will is a legal document that sets out a person’s wishes for how their assets should be distributed upon their death. In addition to assets like bank accounts, the will specifies the distribution of real estate, investment accounts, and any other assets.
The will may designate heirs for specific items of either real or sentimental value. A will may also include anything involving dependents, desired management of accounts, and details on financial interests.
Bank account beneficiary vs. will
Generally, a will does not override banking beneficiary designations listed on the bank account. This is because most bank accounts are considered non-probate assets, meaning they pass directly to the designated beneficiary without being subject to the terms of a will.
Adding a beneficiary to a bank account can be a way to pass some of your assets to your heirs without passing through probate court. In addition to setting up a bank account beneficiary, setting up beneficiaries on investment accounts will help your heirs gain access to some funds without the delay or costs of probate.
Ways a will may override a beneficiary on a bank account
Generally, if someone designates a beneficiary when they open a bank account, that banking beneficiary will receive the funds in the account upon the death of the account holder. It’s like you signed a contract with the bank, and it is only legally allowed to transfer the account to the beneficiary named in that document.
If, for example, you opened the bank account, and later created a will indicating that the funds should go to someone else, the beneficiary designation on the bank account will still take precedence over the will when it goes to probate court.
Only in rare cases can a will override a beneficiary on a bank account. For this reason, it’s important to double-check the designated beneficiary on all bank accounts and investment accounts to ensure they are not in conflict with the desires expressed in your will.
Should you have a beneficiary on your bank account or a will?
You should always connect with your lawyer to make estate plans for your situation. It’s worth having both bank account beneficiaries and a will. The pros of a bank account beneficiary are simple: Those funds won’t need to pass through probate, and your heirs can gain access to them quickly. Adding a beneficiary to a bank account is also easy to do and doesn’t take much time.
But if the beneficiary on the bank account is different from the will, in most cases the beneficiary designated will be honored. Check with your bank and lawyer about bank account beneficiary rules specific to your area.
How to draft a will that could override a beneficiary on a bank account
If you want your will to override a beneficiary on a bank account, that usually won’t be possible. But you can ensure that the bank account beneficiary and the beneficiary designated in the will are the same. This can help eliminate potential conflicts between heirs.
Understand the local jurisdiction
In some states, the will may specify that any banking beneficiary designations are to be honored, regardless of what is written in the will. In most states, the beneficiary designations on bank accounts will be considered as having priority over whatever is written in the will.
Even if the beneficiary on the bank account was designated 30 years ago and the will was updated last year, the beneficiary on the bank account will be honored in almost all cases. To be sure of the situation in your case, it’s worth checking the laws in your jurisdiction and with your bank for bank account beneficiary rules.
Understand the type of bank account
Keeping different bank accounts can have different regulations. In the case of a joint bank account, for example, a banking beneficiary doesn’t come into play. In the case of a joint bank account, the surviving joint account holder will continue as the sole account holder.
It’s worth confirming with your bank as different bank policies can handle joint bank account cases where one account holder has died in different ways. You might need to provide the death certificate or fill out some forms to retain sole access for the surviving joint account holder.
Seek professional legal advice
It is important to seek professional legal advice when deciding whether a will can override the designated beneficiary of a bank account. An experienced attorney can advise you on the best course of action and help you ensure the proper steps are taken so your wishes are honored. The more you can plan now — including ensuring that your will aligns with the beneficiaries on bank accounts and investment accounts — the less hassle your heirs will face later.
Why A Banking Beneficiary Makes Sense
Does a will override a beneficiary on a bank account? No, in almost all cases the beneficiary on the bank account will receive access to the funds after death. This means they get the funds right away, without having to go through probate.
For each bank account, investment account, or life insurance policy, you can name one or more beneficiaries who will gain access to your account upon your death. Adding a beneficiary to a bank account and noting these people in your will for the same accounts will avoid conflicts and confusion for your heirs. Setting up banking beneficiaries takes little time but can mean your family doesn’t have to wait for access to your funds. Perhaps consider it a final gift to ensure their well-being and harmony after you die.
Does a will supersede a beneficiary on a banking account?
No, in almost all cases, a will does not supersede a beneficiary on a bank account. Check with your lawyer about your situation. Normally, a bank account will be transferred to the designated beneficiary shortly after the original account holder’s death, without passing through probate.
Can you contest a beneficiary on a bank account?
It is possible to contest a beneficiary on a bank account, although the process is not clear or simple. If you’re considering contesting a beneficiary on a bank account, it’s worth speaking with an experienced lawyer to discuss options in your situation.
What happens when you add a beneficiary to your bank account?
When you add a beneficiary to a bank account, it allows the funds to bypass probate and pass directly to the beneficiary after your death. During your lifetime, the beneficiary doesn’t have access to the bank account.