Yes. In many cases, you can change the beneficiary of a life insurance policy, retirement account, annuity, certain bank accounts, or transfer-on-death securities without changing your will.
The key is knowing which document controls each asset. A will generally directs property that becomes part of your probate estate. Assets with valid beneficiary designations often pass according to those designations instead.
If you live in Buffalo, New York, or a nearby area, reviewing your beneficiary forms together with your will, trusts, account ownership, and other estate planning documents can help you confirm that the entire plan still reflects your wishes.
Friedman & Ranzenhofer, PC helps New York families review wills, trusts, beneficiary designations, retirement accounts, life insurance policies, and other estate planning documents.
Learn more about estate planning at:
https://www.wny-lawyers.com/buffalo-estate-planning-attorneys/
Robert Friedman
Michael Ranzenhofer
Justin Friedman
Can You Change a Beneficiary Without Changing Your Will?
Yes. You can often change a beneficiary without changing your will when an account, policy, or other asset has its own beneficiary designation.
Beneficiary designations are commonly used for assets such as:
- Life insurance policies
- Individual retirement accounts
- Employer-sponsored retirement plans
- Annuities
- Certain bank trust accounts, including Totten trust accounts
- Securities registered in transfer-on-death form
If an account or policy permits a beneficiary designation, you generally make the change through the financial institution, insurance company, retirement plan administrator, brokerage firm, or other company that maintains the asset.
You usually do not need to rewrite your will merely because you changed the beneficiary on one of these assets.
Your will still has an important role. It may control property that is titled solely in your name and does not otherwise pass through a beneficiary designation, trust, joint ownership arrangement, or another non-probate transfer.
Key Point: A beneficiary designation and a will can direct different assets to different people. Review them together so that the overall result matches your wishes.
Why Does Your Will Not Control Every Asset?
Your will does not necessarily control every asset you own.
New York law recognizes beneficiary designations for certain retirement benefits, annuities, insurance proceeds, and securities registered in beneficiary form. When a valid designation applies, the asset may pass under that designation rather than under the terms of your will.
Consider a Buffalo resident whose will states that the probate estate should be divided equally between two adult children. The resident also owns a life insurance policy that names only one child as the beneficiary.
If the beneficiary designation remains valid when the policyholder dies, the life insurance proceeds may pass to the named beneficiary rather than being divided under the will.
A similar issue can arise with retirement accounts, annuities, and securities that have valid beneficiary designations.
This is why an estate plan should address your complete financial picture, not only your will.
A useful review should consider:
- What your will says
- Who is named on your current beneficiary forms
- Whether contingent beneficiaries are listed
- Whether accounts are jointly owned
- Whether property has been transferred into a trust
- Whether securities have transfer-on-death registrations
- Whether real estate ownership has changed
- Whether your family circumstances have changed
You can also review the estate planning checklist at:
https://www.wny-lawyers.com/buffalo-estate-planning-checklist-guide/
When Should You Update Your Will Too?
Changing a beneficiary does not automatically mean that you must change your will.
Still, a beneficiary change can be a useful reason to review the rest of your estate plan because your documents and account designations work together.
You may want to review your will after you:
- Get married or remarried
- Get divorced
- Have or adopt a child
- Lose a spouse or beneficiary
- Experience a major change in a family relationship
- Buy or sell substantial property
- Create or change a trust
- Experience a major financial change
- Want to change your executor
- Want to change a guardian nomination for a minor child
A beneficiary change can also affect how your overall property is divided.
For example, imagine that your will leaves your probate estate equally to three children. One child is also the sole beneficiary of a large retirement account.
If that retirement account represents a substantial part of your assets, that child may receive more property overall than the other two children.
That result may be exactly what you intended. The concern arises when the result does not match what you believed your estate plan would accomplish.
What Happens to Beneficiary Designations After a New York Divorce?
A New York divorce can affect beneficiary designations, but you should still review each designation directly.
New York Estates, Powers and Trusts Law Section 5-1.4 generally revokes certain revocable dispositions, appointments, provisions, and nominations in favor of a former spouse after a divorce, annulment, or qualifying judicial separation.
The statute can apply to several types of governing instruments, including wills, trusts, insurance policies, retirement plans, accounts, and securities registered in beneficiary form.
Federal law can change the result for some employer-sponsored benefit plans. In particular, federal ERISA rules can preempt state laws that automatically revoke a former spouse as beneficiary of an ERISA-governed plan. Plan documents and federal benefit rules may control the payment.
For that reason, do not rely only on an automatic revocation rule after a divorce. Review each beneficiary form and governing document with the institution or plan administrator.
After a divorce, review:
- Your will
- Life insurance policies
- IRAs
- Employer-sponsored retirement plans
- Powers of attorney
- Health care documents
- Trusts
- Jointly owned accounts
- Real estate ownership
- Bank trust accounts
- Transfer-on-death securities
Updating the records directly can help make your intentions clearer.
Why Do Primary and Contingent Beneficiaries Both Matter?
Primary and contingent beneficiaries both matter because they determine who may receive an asset if the first beneficiary cannot receive it.
A primary beneficiary is generally the first person or entity entitled to receive the asset.
A contingent beneficiary may receive the asset if the primary beneficiary dies before you, disclaims the asset, or otherwise cannot receive it under the applicable account or policy rules.
People sometimes update a primary beneficiary but forget to review the contingent beneficiary.
If your primary beneficiary cannot receive the asset and no effective contingent beneficiary is listed, the account or policy may be distributed under the contract, plan, or institution’s default provisions. In some circumstances, the asset may become payable to your estate.
During a beneficiary review, confirm:
- The full names of primary beneficiaries
- The full names of contingent beneficiaries
- The percentage allocated to each beneficiary
- Whether the percentages total 100 percent
- Whether a named trust is still in effect
- Whether the trust name and date are correct
- Whether the institution has accepted the current designation
Should You Name a Minor Child as a Beneficiary?
You may be able to name a minor child as a beneficiary, but the designation can create legal and administrative issues.
In New York, when a child receives money or property through an inheritance, life insurance policy, or similar source, a Surrogate’s Court proceeding may be needed so that a guardian can safeguard the child’s property.
That process can involve court supervision over the funds.
Some parents use a trust instead of leaving substantial assets directly to a minor.
A trust may allow you to establish:
- Who will manage the property
- How the funds may be used
- When distributions may be made
- When the beneficiary may receive direct control of the property
Whether a trust is appropriate depends on your family circumstances, the type and value of the asset, and your estate planning goals.
You can learn more about trust planning at:
https://www.wny-lawyers.com/buffalo-living-trust-attorneys/
Do Special Needs Beneficiaries Require Different Planning?
Special needs beneficiaries can require more careful planning when they receive means-tested government benefits.
An outright inheritance or direct beneficiary designation can affect eligibility for programs that use income or resource limits.
Federal Supplemental Security Income rules recognize certain trust exceptions, including qualifying special needs trusts and pooled trusts. The effect of a trust still depends on how it is created, funded, written, and administered.
A beneficiary change involving a person with disabilities should be reviewed in light of:
- The beneficiary’s age
- The public benefits the beneficiary receives
- The amount and type of property involved
- The source of the funds
- The terms of any existing trust
- How distributions from the trust may be made
- The beneficiary’s long-term needs
An estate planning attorney can help you evaluate whether a direct designation, trust designation, or another arrangement fits the rest of your plan.
Can You Name Your Estate as the Beneficiary?
Some beneficiary forms allow you to name your estate as the beneficiary.
That choice may fit some estate plans, but it can change how the asset is administered.
If an asset becomes payable to your estate, it may become part of the estate administration process instead of passing directly to an individual beneficiary.
Retirement accounts require extra attention. Federal required minimum distribution rules distinguish between individual beneficiaries and beneficiaries that are not individuals, including an estate. That distinction can affect how an inherited retirement account must be distributed.
Before naming your estate as the beneficiary of a retirement account, life insurance policy, or other asset, consider why you are making that choice and how it affects the rest of your estate plan.
How Do You Change a Beneficiary Correctly?
To change a beneficiary correctly, follow the procedures required by the institution that maintains the account or policy.
A practical process is to:
- Obtain the institution’s current beneficiary change form or online beneficiary process.
- Review the existing primary and contingent beneficiaries.
- Enter the new beneficiary information carefully.
- Follow any signature, acknowledgment, spousal consent, or other requirements that apply to the account or plan.
- Submit the change according to the institution’s instructions.
- Confirm that the institution accepted and recorded the change.
- Save the confirmation with your estate planning records.
- Review your will, trusts, and related documents to determine whether any coordinated changes are needed.
Do not assume that placing a different name in your will will automatically change a beneficiary designation held by an insurance company, retirement plan, brokerage firm, or financial institution.
For many beneficiary-designated assets, the institution’s records and governing documents determine who receives the property.
How Often Should You Review Beneficiary Designations?
You should review beneficiary designations when you review your estate plan and after major life events.
A review may be appropriate after:
- Marriage
- Divorce
- Birth or adoption of a child
- Death of a beneficiary
- Retirement
- A major change in finances
- Creation or amendment of a trust
- Purchase or sale of major property
- Changes in family relationships
Even when no major event has occurred, a periodic review can identify old beneficiary choices, outdated addresses, deceased beneficiaries, missing contingent beneficiaries, or trust information that no longer matches your estate plan.
How Can a Coordinated Estate Plan Reduce Surprises?
A coordinated estate plan can reduce surprises by showing how your will, trusts, beneficiary designations, account ownership, and property titles work together.
Beneficiary designations can be useful because they allow certain assets to pass according to the account or policy terms without being distributed under the probate provisions of your will.
Problems can arise when the documents were completed at different times and never reviewed together.
You may have:
- A will signed several years ago
- A life insurance designation completed before the will
- A retirement account updated more recently
- A trust created after those documents
- Jointly owned property with its own transfer rules
Reviewing those items together gives you a clearer picture of what may happen to your property.
Your goal does not need to be an equal distribution among every beneficiary. Your goal should be a result that reflects your current intentions.
Speak With a Buffalo Estate Planning Attorney
If you are considering changing a beneficiary or you are unsure whether your beneficiary forms still match your estate plan, Friedman & Ranzenhofer, PC can help you review your will, trusts, retirement accounts, life insurance policies, account ownership, and related estate planning documents.
The firm serves clients in Buffalo, New York, and nearby areas, with offices throughout New York State.
Call 716-543-3764 to discuss your estate planning questions.
You can also contact the firm at:
https://www.wny-lawyers.com/contact-us/
This article is for informational purposes only and is not legal advice. The application of New York and federal law depends on the facts, governing documents, account type, and other circumstances. Consult an attorney about your specific situation.
