Beneficiary Designations

Beneficiary designations are the most powerful—and most overlooked—estate planning tool. They transfer assets directly to named beneficiaries, bypassing probate entirely.

Types of Non-Probate Transfers

Transfer-on-Death (TOD)

Avoids Probate

Securities accounts that pass to a named beneficiary upon death, avoiding probate.

Payable-on-Death (POD)

Avoids Probate

Bank accounts that pass to a named beneficiary upon death, avoiding probate.

Joint Ownership (JTWROS)

Avoids Probate

Property held as joint tenants with right of survivorship passes automatically to surviving owner(s).

Life Insurance Beneficiary

Avoids Probate

Proceeds pass directly to named beneficiary, not through probate (unless estate is named as beneficiary).

Retirement Account Beneficiary

Avoids Probate

IRAs, 401(k)s, and pensions pass to named beneficiary. Surviving spouse has special rollover rights.

Critical Principle: Designations Override Wills

Beneficiary designations are contractual arrangements with financial institutions and supersede any conflicting provisions in your will or trust. If your will leaves everything to your children but your life insurance names your ex-spouse, the ex-spouse gets the life insurance proceeds.

Common Mistakes

Naming your estate as beneficiary

Forces proceeds through probate, subjecting them to creditor claims and inheritance tax.

Failing to name contingent beneficiaries

If primary beneficiary predeceases you, assets may default to estate and go through probate.

Not updating after divorce

PA law does not automatically revoke beneficiary designations after divorce for all account types. ERISA-governed plans (401k, pension) follow federal law—Sveen v. Melin (2018) may apply.

Conflicting designations

Beneficiary designations override your will. If your will says one thing and the designation says another, the designation wins.

Naming minors directly

Minors cannot receive assets directly. A custodian or trust should be named instead.

Best Practices

Review all beneficiary designations annually and after every major life event

Coordinate designations with your overall estate plan (will, trust, POA)

Name both primary and contingent beneficiaries

Keep a master list of all accounts with beneficiary designations

Consider per stirpes vs. per capita distribution for multiple beneficiaries

Ensure retirement account designations comply with SECURE Act rules for non-spouse beneficiaries (10-year distribution requirement)

Legal Disclaimer

Notice: Estate administration and planning involve complex legal, tax, and fiduciary considerations. This information is provided for educational purposes. Consult with a licensed attorney and tax professional for guidance specific to your situation.

Content prepared under the supervision of a PA licensed attorney. Last updated April 2026.