Beneficiary Beats Will

Episode notes

Printable

The beneficiary audit

The checklist from the video: list your accounts, confirm who's on file in writing, check for backups, and redo it after big life changes. It's a general checklist, not advice about your situation.

Open the printable checklist

Two rulebooks

The will rulebook. Probate is the court process where a will is proven valid and the estate is settled under court supervision. Assets are collected, debts and taxes are paid, and what's left goes to the heirs or the people named in the will. ^[F17] Property that goes through probate is handed out under the will, or under the state's default inheritance rules if there's no will. Nonprobate property, like joint accounts with survivorship or payable-on-death accounts, isn't controlled by the will at all. ^[F18] (Washington State has a narrow exception for some accounts; see below.) ^[F24] FINRA: “Probate can take time and cost money.” ^[F4]

The form rulebook. FINRA, the organization that oversees its member brokerage firms in the US, warns that a transfer-on-death designation on a brokerage account supersedes your will or trust. If your will splits the account between two kids but the TOD names one, that one child gets it and doesn't have to share. ^[F1]

California's court self-help site, for example, lists life insurance, bank and retirement accounts, pensions, annuities and living-trust property as things a named beneficiary should be able to collect without going to probate court. ^[F5] It also says: “If the property is owned in joint tenancy, the surviving owner gets the property.” ^[F5] And California's Orange County Superior Court warns: “If a joint tenant died and puts in a will or trust that his or her share would pass to a person other than the surviving joint tenant, the joint tenancy would override his or her … wishes.” ^[F6]

The form can be changed during life, not after. FINRA: “You can change beneficiaries or cancel your TOD throughout the life of your account… Once you die, your designated beneficiaries cannot be changed.” ^[F3]

Four Supreme Court cases

2009 · ERISA plan · about $400,000

Kennedy v. Plan Administrator for DuPont Savings and Investment Plan

“Upon their marriage, William designated Liv Kennedy his SIP beneficiary and named no contingent beneficiary. Their subsequent divorce decree divested Liv of her interest in the SIP benefits, but William did not execute a document removing Liv as the SIP beneficiary.” ^[F9] (SIP is DuPont's Savings and Investment Plan.) He did update a different form: he “did execute a new beneficiary-designation form naming his daughter, Kari Kennedy, as the beneficiary under DuPont's Pension and Retirement Plan, also governed by ERISA.” ^[F9]

“On William's death in 2001… DuPont, instead, relied on William's designation form and paid the balance of some $400,000 to Liv.” ^[F9] The Court held that “the plan administrator did its ERISA duty by paying the SIP benefits to Liv in conformity with the plan documents. ERISA provides no exception to the plan administrator's duty to act in accordance with plan documents.” ^[F9]

ERISA is a 1974 federal law that sets the ground rules for most private-sector employer retirement and health plans. ^[F22] It requires plan fiduciaries to act “in accordance with the documents and instruments governing the plan.” ^[F8]

“The plan provided an easy way for William to change the designation, but for whatever reason he did not.” ^[F9]

Left open: “Nor do we express any view as to whether the Estate could have brought an action in state or federal court against Liv to obtain the benefits after they were distributed.” ^[F9]
2001 · ERISA plan · $46,000

Egelhoff v. Egelhoff

“Mr. Egelhoff was employed by the Boeing Company, which provided him with a life insurance policy and a pension plan. Both plans were governed by ERISA, and Mr. Egelhoff designated his wife as the beneficiary under both. In April 1994, the Egelhoffs divorced. Just over two months later, Mr. Egelhoff died intestate” (without a will). “The life insurance proceeds, totaling $46,000, were paid to her.” ^[F10]

Washington's statute at the time treated the former spouse “as if the former spouse failed to survive the decedent.” ^[F10] ERISA has a clause that overrides state laws that relate to the plans it covers. In Egelhoff, the Supreme Court said Washington's divorce-revocation law was overridden for ERISA plans, because it would have made plan administrators follow state rules instead of the plan's own paperwork. ^[F23]
2013 · Federal employee life insurance (FEGLI) · $124,558.03

Hillman v. Maretta

“Warren Hillman named then-spouse, respondent Judy Maretta, as the beneficiary of his Federal Employees' Group Life Insurance (FEGLI) policy. After their divorce, he married petitioner Jacqueline Hillman but never changed his named FEGLI beneficiary.” “Warren died unexpectedly in 2008.” Maretta “collected the FEGLI proceeds in the amount of $124,558.03.” ^[F12]

Virginia's law revoked an ex-spouse's designation on divorce (Section A), and both sides agreed federal law pre-empted that. Its backup law (Section D) made “the former spouse liable for the principal amount of the proceeds to the party who would have received them were Section A not pre-empted.” ^[F12] The Court: “Held: Section D of the Virginia statute is pre-empted by FEGLIA.” ^[F12]

The US Office of Personnel Management (OPM): “By law, FEGLI benefits are paid according to the most recent valid designation on file with your employing agency, or if there's no valid designation, then according to the order of precedence provided by law. A will cannot supersede your designation or even the order of precedence, so it's important to make sure your designation is up to date.” ^[F15] A narrow exception, from OPM's form SF 2823: a change of beneficiary in a will “is valid only if you sign your will, two people who witnessed your signature sign your will, and your agency (or OPM, for retirees or insured compensationers) receives your will before the Insured's death.” ^[F16]
2018 · Privately bought life insurance · the counterpoint

Sveen v. Melin

“Mark Sveen and respondent Kaye Melin were married in 1997. The next year, Sveen purchased a life insurance policy, naming Melin as the primary beneficiary and designating his two children from a prior marriage, petitioners Ashley and Antone Sveen, as contingent beneficiaries. The Sveen-Melin marriage ended in 2007, but the divorce decree made no mention of the insurance policy and Sveen took no action to revise his beneficiary designations.” ^[F13]

The Supreme Court upheld Minnesota's revocation-on-divorce law applied to a life insurance policy bought before the law existed (the case was sent back to the lower court): “Held: The retroactive application of Minnesota's statute does not violate the Contracts Clause.” ^[F13] By the Court's count, as of 2018: “26 States have by now adopted revocation-on-divorce laws substantially similar to the Code's” (the Uniform Probate Code). ^[F13]

Minnesota's current statute (2025 version) revokes revocable beneficiary designations to a former spouse, unless the governing instrument, a court order, a marital property contract, or a retirement plan document expressly provides otherwise. ^[F14] And a payor “is not liable for having made a payment … before the payor or other third party received written notice of the dissolution.” ^[F14]

Why it came out differently: the outcome after a divorce can depend on your state and on whether federal law governs the account (compare Egelhoff and Hillman). ^{[F13, F10, F12]}

Washington: when a will can beat an earlier form

Washington State only · rules vary by state

In Washington State, for example, a will can override a beneficiary designation made before the will, on accounts like a payable-on-death bank account or a transfer-on-death brokerage account, but only if the will specifically refers to that asset or that type of asset. A general “everything to my kids” clause doesn't do it, a form signed after the will still controls, and life insurance, workplace benefit plans, IRAs, transfer-on-death deeds and real estate held in joint tenancy aren't covered. ^[F24]

Deadline to claim. In Washington, a will's beneficiary claiming one of these accounts may have to petition the court within the earlier of six months after the will is admitted to probate or one year after the death. ^[F24]

RCW 11.11.070(3): “A testamentary beneficiary claiming a nonprobate asset who has not filed such a petition within the earlier of: (a) Six months from the date of admission of the will to probate; and (b) one year from the date of the owner's death, shall be forever barred from making such a claim or commencing such an action.” ^[F24]

Institutions may still pay per the form unless they've received formal written notice of the will's claim (what Washington's law calls “actual knowledge”). ^[F24] Under RCW 11.11.040, a financial institution or other third party “may rely conclusively and entirely upon the form of the nonprobate asset and the terms of the nonprobate asset arrangement in effect on the date of death of the owner” unless it “has actual knowledge of the existence of a claim by a testamentary beneficiary.” ^[F24] And the chapter “applies to any will of an owner who dies while a resident of this state on or after July 1, 1999.” (RCW 11.11.901) ^[F24]

That's one state's rule, and the form is still the simpler fix. (Opinion.)

Married? Two more rules

Workplace plans (federal rule). According to the US Department of Labor, in most 401(k)-type plans, if a married worker dies before taking the money out, the surviving spouse automatically gets it, unless the spouse signed a waiver witnessed by a notary or plan representative. ^[F26]

Community property (California example). In California, a community-property state, if one spouse names someone else on a bank or brokerage account holding community property and the other spouse never consented in writing, the other spouse can still claim their share, though they may have to go to court to get it. ^[F25]

IRA rules aren't covered in this episode.

Start your beneficiary audit

The printable beneficiary audit walks through four steps: list every account, ask each institution in writing who's on file, check for a backup beneficiary, and redo it after any marriage, divorce, birth or death in the family. If your will and your forms disagree, that's a good reason to talk to an estate-planning attorney in your state.

Beneficiary Beats Will

Key points

Episode notes

The beneficiary audit

Two rulebooks

Four Supreme Court cases

Kennedy v. Plan Administrator for DuPont Savings and Investment Plan

Egelhoff v. Egelhoff

Hillman v. Maretta

Sveen v. Melin

Washington: when a will can beat an earlier form

Married? Two more rules

Start your beneficiary audit

Sources