Does a beneficiary trump the will on bank accounts, IRA's, investment accounts etc. if a beneficiary is named on said accounts? In other words, does a beneficiary benefit before a residual estate to be shared is determined?
2 Answers from Attorneys
Yes, they "pass outside of a will." They are excluded from the estate of the testator (the deceadant).
Yes. And in my experience half the time this aspect of the law tends to negate the true intentions of the testator, which are most likely reflected in the residuary clause of the will. Beneficiary and transfer on death designations are often added on the account years and years before the will is written. And most likely the testator has forgotten who was named as beneficiary on each account, and assumes the residuary clause in the will is going to take precedence over the transfer on death designation. Not always, but a good part of the time. But the law is the law; I've seen this lead to a permanent breakup of family harmony.
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