Are Your Bank Account Beneficiaries Correct? Florida Rules You Need to Know

Most people believe that once they sign a will or trust, their estate plan is “done”, but in practice, that belief is one of the most common and costly, misunderstandings in estate planning.

Last year, I reviewed dozens of estate plans that were carefully prepared and legally sound. On paper, they reflected exactly what the person wanted to happen. Yet in most of those cases, the plan did not work the way the family expected.

The reason wasn’t a drafting error.  It was beneficiary designations.

Why Beneficiary Designations Matter More Than You Think

Certain assets do not pass under your will or your trust at all. Instead, they transfer automatically based on the beneficiary designation form on file with the financial institution.

These include:

• Retirement accounts such as 401(k)s and IRAs

• Life insurance policies

• Annuities and pension plans

• Bank and investment accounts with payable-on-death (POD) or transfer-on-death (TOD) designations

For many families, these accounts make up the majority of their wealth. And yet, the beneficiary forms that control them are often completed years or even decades ago and are never reviewed again.

When those forms are outdated or incomplete, even the most carefully drafted estate plan can be overridden.

Common Problems 

Some of the most frequent issues include:

• Assets passing to the wrong person

  A former spouse or estranged relative remains listed simply because no one updated the form.

• Beneficiaries who are no longer living

  When a named beneficiary has already passed away and no backup was listed, the asset may end up in probate.

• Naming the “estate” as beneficiary

  This can eliminate valuable tax benefits on retirement accounts and create unnecessary administrative delays.

• Minor children named directly

  Minors cannot legally inherit these assets outright, which often results in court involvement and the appointment of a guardian to manage the funds.

In each of these situations, the family believed the will or trust would “fix it.” Unfortunately, the beneficiary designation controls and the will does not override it.

A Simple Review That Makes a Big Difference

The good news is that this is one of the easiest estate planning issues to correct.

A basic beneficiary review can often be completed in a short time over the weekend:

List all accounts

• List all accounts

  Include retirement, insurance, bank, and investment accounts.

  
  

• Confirm current beneficiaries

  Don’t assume! Verify directly with each institution.

  
  

• Update as needed

  Many changes can be completed online or with a short form.

  
  

• Add contingent beneficiaries

  Always name a backup in case the primary beneficiary does not survive you.

  
  

• Review annually

  Set a reminder to revisit these designations each year or after major life events—such as death, disability, and divorce.

Estate planning is not just about documents.  If your beneficiary designations do not match your overall plan, your will or trust may not accomplish what you intended, no matter how well it was drafted.

Before creating new documents or assuming everything is in order, take time to review the forms that quietly control most of your assets.

Sometimes, the most important part of an estate plan isn’t the legal document you paid for—it’s the free form you forgot to update.

A few minutes of review today can spare your family months of difficulty tomorrow.