Do IRAs Override a Last Will & Testament?

By Lee Hall, J.D.

Do IRAs Override a Last Will & Testament?

By Lee Hall, J.D.

When you designate a beneficiary, the wealth accumulated in your individual retirement account, or IRA, goes to that party after you die—regardless of any language to the contrary that might appear in your will. When you open an IRA, you direct the wealth in your account to pass to the beneficiary of your choice after you die.

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The Designated Beneficiary

Since the IRA account efficiently passes from you, upon your death, to the party you designated, the assets in your retirement account need not go through probate. As the holder of an IRA, you will receive a form to complete, which must identify your designated beneficiary. Assets pass to your primary, or preferred, beneficiary after you die. You can (and should) also name a backup party to receive the assets should your primary beneficiary die before you do.

After you submit the form, your designated beneficiary is entitled to the assets from the account upon your death regardless of what is stated in your will. In some cases, a person dies who never submitted a beneficiary form. In other cases, there's only a primary beneficiary, and that person has already passed away. In effect, there is no named beneficiary. Should this occur, the assets typically pass to the surviving spouse, under the contractual terms of the retirement account. If there is no surviving spouse, the assets in the account go into the estate of the deceased—and then through probate.

Your executor looks to your last will and testament to know who receives the financial assets in the account. Before they stand to receive anything, creditors are first to reach the assets that go through probate. Therefore, it is advantageous to name a beneficiary, supply a backup beneficiary, and keep the designation updated.

Dying Intestate

People who die without a will are "intestate." Should you die without a beneficiary and a will, the intestacy provisions in the law of the state take over to determine who receives the assets. The money in the account goes to heirs according to the rules of intestate succession.

It is important to ensure you have, in fact, submitted a beneficiary designation to the administrator of your IRA. Then update the designation as your life's circumstances evolve. If you divorce, for example, and you no longer want your former spouse to receive the assets in your account, update your beneficiary designation to reflect your more current wishes.

The IRA administrator cannot shift the designated beneficiary after your death. This is the case even if all parties affected explain that your life had changed, and even if the beneficiary whose name appears on the paperwork agrees to relinquish the financial benefit, knowing you would now want a different person (or group of people) to receive it.

It's always best to regularly check your beneficiary designations. No one else can fix your lapse later if you don't correct it yourself. However, if you are unsure of what steps you need to take to protect your assets, and your loved ones, you can research the applicable laws and regulations in your state.

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.