Beneficiary designations supersede all other estate planning documents. Assets with designated beneficiaries do not pass through probate court (and courts are generally reluctant to overrule the designations). Beneficiary designations should be considered final. Thus, failure to designate any beneficiaries causes the asset to become part of your probate estate – meaning it will pass to heirs in accordance to your will – but only after going through the lengthy, expensive and public probate process.
For each type of asset that allows you to name beneficiaries, you can name a primary and a secondary beneficiary. The primary beneficiary inherits the asset upon your death. If all the primary beneficiaries predecease you, the asset will pass to all the surviving secondary beneficiaries. If all have died, the asset will become part of your estate and pass to your other heirs via your will.
It is common, but by no means required, for people to name their spouse as their primary beneficiary and their children as their secondary beneficiaries. Indeed, you may designate more than one primary and secondary beneficiary.
In next blogpost, we will show you the list of assets that you need to have beneficiary designations.