If there is a conflict between a will and a beneficiary designation, the beneficiary designation is going to take precedence during the division of an estate.
It is crucial to remember how this works. Many people forget to update their beneficiary designations when they update their wills and estate plans, or they assume that the changes to the will can take care of it for them. That’s not how it works, and this can be a costly mistake that means assets do not actually go where you intended.
For instance, maybe you took out a $250,000 life insurance policy when your children still lived at home. You wanted to make sure you could help care for them if you passed away unexpectedly. You named your eldest child, who was 18, as the beneficiary. That did not happen, thankfully, and the children all grew up and moved out of the house.
You still had the life insurance policy, but since they did not need it, you decided to give the money to charity. In your will, you wrote that the proceeds from the payout should be given to a local nonprofit that you have supported for years.
If you don’t update the beneficiary agreement, that’s not going to happen. The life insurance company is just going to pay your eldest child, as you directed them to do. They will not care that you changed your will. The only way that money really goes to charity is if your eldest child decides to give it to them.
Whenever you update your plan, make sure you are very careful to update everything and look into all of the steps you need to take.