Trust Override a Beneficiary Designations- Georgia Estate Planning (2024)

FAQs

Does a trust override a beneficiary designation? ›

The designation of a beneficiary on a bank account generally takes precedence over the instructions outlined in a Will or trust.

The Will will also name beneficiaries who are to receive assets. An executor can override the wishes of these beneficiaries due to their legal duty.

When a beneficiary can't be determined, the benefit is often instead paid out to your estate. The proceeds and the rest of your property and investments will be distributed according to your will, the insurance contract details and state law. The contract will go into probate if there isn't a beneficiary on file.

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.

No one can change beneficiary designations after you die. There are two circ*mstances when you need another person's permission to update a beneficiary: if the policyholder lives in a community property state or if they named someone as an irrevocable beneficiary.

If you have a valid case and strong legal support, you may be able to prove that the beneficiary listed on the policy doesn't accurately reflect the policyholder's wishes when they passed away. Note that regardless of the outcome, the life insurance company will distribute the funds based on the court's orders.

However, there may be certain circ*mstances where the executor or next of kin could contest the beneficiary designation. For example, if there is evidence of fraud or undue influence in the beneficiary designation process, the court may invalidate the designation and award the proceeds to the estate.

A beneficiary designation is the act of naming the person who will inherit an asset in the event of the account owner's passing. Some common examples include life insurance policies and retirement accounts. When the account owner passes away, their assets are then transferred to the beneficiary that they designated.

Dealing with a problem beneficiary

California executors can overrule beneficiary wishes based on the decedent's will or court orders, and align actions with legal requirements. Before making such decisions, it's wise to consult a probate attorney in order to comply with regulations and avoid potential disputes.

Nonperson beneficiaries of account owners who died before their required beginning date (RBD), which is the deadline to begin RMDs, remain subject to the 5-year rule and—with the exception of certain see-through trusts—must distribute the inherited assets within five years.

Which beneficiary designation Cannot be changed without the beneficiary's consent? ›

An irrevocable beneficiary is a person or entity who is designated to receive the assets in your life insurance policy and cannot easily be changed or removed unless they consent.

Special circ*mstances for changing beneficiaries

In some circ*mstances — like in specific terms of a divorce or if you made what's called an "irrevocable designation" — you may not be able to change or name a new beneficiary without getting your current beneficiary's consent.

Most living trusts automatically become irrevocable upon the settlor's death, so if you were included as a beneficiary of a trust when the settlor died, you will almost certainly remain a beneficiary. An exception is if the trust in question were to be invalidated as the result of a trust contest.

Beneficiary Designation Takes Precedence Over A Will

A beneficiary designation supersedes a will.

If a beneficiary requests access to financial institution statements and the executor refuses to provide them, the beneficiary can take legal action. They can follow the court for an order compelling the executor to reveal the requested information.

Trusts avoid the probate process

While assets controlled by your will have to go through probate in order to be verified and distributed according to your wishes, trust assets usually don't. A will becomes a part of public record, while a trust agreement stays private.

In a beneficiary-controlled trust, you can name the primary beneficiary as the sole trustee, or if you name a co-trustee, the beneficiary can be given the authority to remove the co-trustee and select a successor co-trustee if they choose.

The primary disadvantage of naming a trust as beneficiary is that the retirement plan's assets will be subjected to required minimum distribution payouts, which are calculated based on the life expectancy of the oldest beneficiary.

Expert-Verified Answer. Naming a trust as a beneficiary of a life insurance policy has a potential disadvantage that involves complications in distribution, potential tax implications, and limitations on the flexibility of managing the policy proceeds.