Can an IRA Be Overridden by a Will?

by Michael Keenan
Your IRA beneficiary designation supercedes your will.

Your IRA beneficiary designation supercedes your will.

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Even though the words, "Last and Final" might appear at the top of your will, that doesn't mean that your will has the final say over where the money in your individual retirement account goes after you die. This is because IRAs are non-probate assets, which means that the beneficiary designation on your IRA determines where the money ends up.

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Selecting Beneficiaries

When you open an IRA, you name the beneficiaries of your account. However, as your life changes, where you want the money to go after you die might change. However, if you only update your will, the money in your IRA account will still go to the beneficiaries you originally named. To change your IRA beneficiaries, you must complete a new beneficiary designation form, which is available from the financial institution that holds your IRA.

Estate as the Beneficiary

You are allowed to name your estate as the beneficiary of an IRA, which would allow your will to control how the assets are eventually distributed. However, this comes with two main drawbacks: First, the distribution would increase the size of your taxable estate, which may result in a higher estate tax obligation. Second, because the money must pass through probate rather than going straight to the beneficiaries, it would delay access.