Beneficiary designations take precedence for distribution over other documents in an estate plan. The individual or entity you name as an account beneficiary will automatically receive the money or account, usually without it passing through the court-supervised probate process.
A beneficiary can be any of the following:
- A person, such as a spouse, child, partner, family member or friend
- A trust
- A charity
- Your estate.
It is also possible to name multiple parties as beneficiaries of the same account, allowing you to divide the money or account among them. For example, you can have half the money in your investment account pass to your spouse and split the other half between your two children.
Federal law, your state, or the account administrator may require that your spouse be listed as a primary beneficiary and receive a minimum amount before you can list other beneficiaries, unless the spouse waives their rights.
If you name your estate as a beneficiary, the money or account could be subject to probate.
However, the money or account may still require court supervision in some instances (e.g., if you name a minor or incapacitated individual as your beneficiary).
