Weekend Read - Think Your Will Covers Everything? Think Again
06/09/2025Most people assume their will controls everything when they pass away, but that’s not always true. Technically, your will controls everything that passes through it. Accounts like IRAs, 401(k)s, life insurance policies, and transfer-on-death accounts never even make it to the will because they have their own beneficiary1. That’s why beneficiary designations are so important.
A Realistic Example
Let’s say Sarah, a widow with two adult children, has the following assets:
In her will, she states that she wants all of her assets split equally between her two children.
Here’s what actually happens when she passes:
Even though her will said “split everything equally,” the IRA beneficiary form overrides that. Unless she had updated her IRA to say 50% to each child, or used per stirpes, her daughter receives nothing from the IRA4.
This is why coordinating your beneficiary forms with your estate plan is so critical.
What Is “Per Stirpes” and Should You Use It?
When naming multiple beneficiaries, especially your children, you may see the option to select “per stirpes.” This legal term means that if one of your beneficiaries dies before you, their share will pass to their children, your grandchildren, instead of being redistributed among the surviving beneficiaries2.
For example, if Sarah named her 2 kids as equal beneficiaries and one of them passes before her the money defaults to the surviving child. A per stirpes designation ensures that your deceased child’s share goes to their kids, not to your remaining two children.
It’s a simple way to ensure each branch of your family receives what you intend, and it helps avoid accidentally disinheriting part of your lineage.
What About TOD Accounts?
So, what can we do about taxable accounts like your regular brokerage account or bank accounts? Many people are surprised to learn that you can add a Transfer-on-Death (TOD) designation to taxable investment accounts and even bank accounts. When you add a TOD designation, the account bypasses probate and passes directly to the person (or people) you’ve named, much like an IRA or life insurance policy does3.
This can be a great tool for simplifying the transfer of assets, especially for people who want to avoid probate without setting up a trust3.
However, just like with other beneficiary forms, TOD designations override your will3. If you name one child on the TOD form but say “split everything equally” in your will, the child on the TOD form gets the entire account.
A few important reminders:
You can name multiple TOD beneficiaries and specify percentages
It’s a good idea to name contingent beneficiaries in case your primary beneficiary passes away before you
If you open new accounts, be sure to add the TOD designation, it doesn’t carry over automatically from older accounts
When to Review Your Beneficiaries
You should review your beneficiary designations:
What to Do Right Now
If you’ve only recently joined my email list, you’ve missed out on many insights and updates that I've been sharing each week. Be sure to visit my blog to explore past content that you might find valuable.
Want to receive these weekly? Subscribe here
Here are a couple other relevant articles I wrote on adjacent topics.
Wills vs Trusts – Which one is right for you
How to avoid probate
Estate Planning Basics
Enjoy your weekend,
Jeremy Raffer, MBA
Director & Wealth Manager
Author “Financial Planning for Widows”
m. 201-747-2705
w. rafferwealthmanagement.com
e. [email protected]
Steward Partners
115 W. Century Rd, Suite 145
Paramus, NJ 07652
1 https://www.americanbar.org/groups/real_property_trust_estate/resources/estate-planning/intro-wills/
2 https://trustandwill.com/learn/per-stirpes-definition
3 https://www.investopedia.com/terms/t/transferondeath.asp
4 https://trustandwill.com/learn/beneficiary-designation-vs-will
Steward Partners, its affiliates, and Steward Partners Wealth Managers do not provide tax or legal advice. You should consult with your tax advisor for matters involving taxation and tax planning and their attorney for matters involving trust and estate planning and other legal matters.
The case study presented is provided for illustrative purposes only. Past performance is no guarantee of future results. The information has been obtained from sources we believe to be reliable, but we cannot guarantee its accuracy or completeness. These strategies do not guarantee a profit or protect against loss and may not be suitable for all investors. Each customer’s specific situation, goals, and results, may differ.
AdTrax 8033374.1 Exp 6/26
A Realistic Example
Let’s say Sarah, a widow with two adult children, has the following assets:
- A home worth $600,000
- An IRA worth $500,000, with her son named as 100% beneficiary
- A taxable brokerage account worth $400,000
In her will, she states that she wants all of her assets split equally between her two children.
Here’s what actually happens when she passes:
- The home goes through probate and is divided according to her will (50/50 between the children)
- The IRA bypasses the will entirely and goes directly to her son (100%), because that’s who she listed on the beneficiary form
- The taxable account also goes through probate and is split per the will
Even though her will said “split everything equally,” the IRA beneficiary form overrides that. Unless she had updated her IRA to say 50% to each child, or used per stirpes, her daughter receives nothing from the IRA4.
This is why coordinating your beneficiary forms with your estate plan is so critical.
What Is “Per Stirpes” and Should You Use It?
When naming multiple beneficiaries, especially your children, you may see the option to select “per stirpes.” This legal term means that if one of your beneficiaries dies before you, their share will pass to their children, your grandchildren, instead of being redistributed among the surviving beneficiaries2.
For example, if Sarah named her 2 kids as equal beneficiaries and one of them passes before her the money defaults to the surviving child. A per stirpes designation ensures that your deceased child’s share goes to their kids, not to your remaining two children.
It’s a simple way to ensure each branch of your family receives what you intend, and it helps avoid accidentally disinheriting part of your lineage.
What About TOD Accounts?
So, what can we do about taxable accounts like your regular brokerage account or bank accounts? Many people are surprised to learn that you can add a Transfer-on-Death (TOD) designation to taxable investment accounts and even bank accounts. When you add a TOD designation, the account bypasses probate and passes directly to the person (or people) you’ve named, much like an IRA or life insurance policy does3.
This can be a great tool for simplifying the transfer of assets, especially for people who want to avoid probate without setting up a trust3.
However, just like with other beneficiary forms, TOD designations override your will3. If you name one child on the TOD form but say “split everything equally” in your will, the child on the TOD form gets the entire account.
A few important reminders:
You can name multiple TOD beneficiaries and specify percentages
It’s a good idea to name contingent beneficiaries in case your primary beneficiary passes away before you
If you open new accounts, be sure to add the TOD designation, it doesn’t carry over automatically from older accounts
When to Review Your Beneficiaries
You should review your beneficiary designations:
- After any major life change: marriage, divorce, death, birth, or adoption
- When you change jobs or retire
- If you update your estate plan
- Or simply as part of a regular financial review every couple of years
What to Do Right Now
- Pull up your retirement accounts, life insurance policies, annuities and taxable accounts.
- Confirm both primary and contingent beneficiaries are current.
- Make sure the names listed align with your estate plan and current wishes.
- If you're concerned about minors or want more control over distributions, consider using a trust.
- And finally, decide whether a per stirpes designation makes sense for your family structure.
If you’ve only recently joined my email list, you’ve missed out on many insights and updates that I've been sharing each week. Be sure to visit my blog to explore past content that you might find valuable.
Want to receive these weekly? Subscribe here
Here are a couple other relevant articles I wrote on adjacent topics.
Wills vs Trusts – Which one is right for you
How to avoid probate
Estate Planning Basics
Enjoy your weekend,
Jeremy Raffer, MBA
Director & Wealth Manager
Author “Financial Planning for Widows”
m. 201-747-2705
w. rafferwealthmanagement.com
e. [email protected]
Steward Partners
115 W. Century Rd, Suite 145
Paramus, NJ 07652
1 https://www.americanbar.org/groups/real_property_trust_estate/resources/estate-planning/intro-wills/
2 https://trustandwill.com/learn/per-stirpes-definition
3 https://www.investopedia.com/terms/t/transferondeath.asp
4 https://trustandwill.com/learn/beneficiary-designation-vs-will
Steward Partners, its affiliates, and Steward Partners Wealth Managers do not provide tax or legal advice. You should consult with your tax advisor for matters involving taxation and tax planning and their attorney for matters involving trust and estate planning and other legal matters.
The case study presented is provided for illustrative purposes only. Past performance is no guarantee of future results. The information has been obtained from sources we believe to be reliable, but we cannot guarantee its accuracy or completeness. These strategies do not guarantee a profit or protect against loss and may not be suitable for all investors. Each customer’s specific situation, goals, and results, may differ.
AdTrax 8033374.1 Exp 6/26