The insurance company never reads your will.
The will is the document that decides where money goes, right? For the largest assets many families own, it is not.
Life insurance is different
Life insurance, 401(k) plans, IRAs, and annuities pass by beneficiary designation. That form sits with the insurance company or the plan administrator; it operates outside the will, and it wins.
The Supreme Court ruling
The Supreme Court settled how completely it wins in a 2009 case, Kennedy v. Plan Administrator for DuPont Savings and Investment Plan. William Kennedy named his wife as beneficiary of his DuPont savings plan in 1974. The couple divorced twenty years later, and in the divorce she gave up her interest in the plan. He never sent in a new form. When he died, his estate asked for the money, and the plan paid the ex-wife instead. The Court agreed, unanimously. The plan had to follow its own documents, and the documents named her.
A court order was not enough to change that. A will wouldn’t have been enough either.
Don’t forget your pension plans
A second surprise sits in the same file drawer. If a married worker has a 401(k), federal law generally makes the spouse the beneficiary unless the spouse signs a written consent naming someone else. Most states have no such requirement for an IRA. Two retirement accounts on the same kitchen table can follow opposite rules.
The fix is in, and it’s easy
The fix takes an afternoon. Pull every beneficiary form: the employer plan, the IRAs, each life insurance policy, any annuity. Read the contingent line too, because a blank one usually sends the money to the estate and through probate. Then update the forms after a marriage, divorce, death, or birth.
An agent or advisor can request copies of all of them at once.
Eustace L. Greaves, Jr., TRA, LUTCF, is a New York State-licensed property casualty and life and health insurance agent. He owns and operates Bridge Insurance Agency. He helps clients purchase life, home, co-op, condo, renters, flood, disability, auto, and other personal insurance. You can reach Eustace at 917-783-7209 or by email at eustace@greavesinsurance.com.
