When most people in Minneapolis, MN, think about estate planning, a will is usually the first document that comes to mind. A will provides important instructions for probate court and ensures your wishes are considered. But here’s what often gets overlooked: a will does not control every asset you own.
Certain accounts, including retirement plans, life insurance policies, and some bank accounts, bypass probate altogether. If your will states one thing but the beneficiary designation states another, the beneficiary designation always prevails.
In this article, we’ll explain why beneficiary designations matter, common mistakes to avoid, and how families in Minneapolis can make sure their entire estate plan works together.
What Are Beneficiary Designations?
Beneficiary designations are instructions you give to financial institutions about who should inherit an account when you pass away. They function like a contract between you and the bank or insurance company.
Some common accounts that rely on beneficiary designations include:
- Retirement accounts like IRAs, 403(b)s, and 401(k)s
- Life insurance policies
- Investment and brokerage accounts
- Bank accounts with “payable on death” instructions
Because these accounts do not go through probate, the probate court and your executor have no authority over them. They pass directly to the person listed, regardless of what your will says.
Why Beneficiary Designations Override a Will
In a recent video, Phillip Ruce, director of Stone Arch Law, explained it this way: “If I fill out a beneficiary form, I’m creating a private agreement that says this person gets the money. It doesn’t matter what the will says. The will is just the default.”
This means that if your will leaves an account to one person but the designation form names someone else, the person on the form inherits the account.
Real-Life Example: The Egelhoff Case
The importance of updated beneficiary designations was underscored in the U.S. Supreme Court case Egelhoff v. Egelhoff.
- David Egelhoff named his wife as the beneficiary of his pension and life insurance.
- The couple later divorced.
- Two months later, David died in a car accident without updating his forms.
His children from a prior marriage argued that the accounts should go to them, but the Court ruled that the ex-wife inherited everything. Federal law required the accounts to be paid according to the beneficiary form, even though David’s will and circumstances had changed.
How Outdated Beneficiary Designations Create Problems
Outdated beneficiary forms can cause significant problems. Even when a will is clear, a mismatched designation can send assets to people the deceased never intended.
For example, if an ex-spouse or distant relative remains listed on a retirement account, that person will inherit the funds, no matter what the will says. Similarly, if no beneficiary is listed at all, the account may revert to the estate and go through probate, adding costs and delays.
Executor Duties vs. Beneficiary Designations
Many families assume the executor named in the will has authority over all assets. In reality, executors manage only the probate estate. Their duties include filing the will, paying debts and taxes, and distributing probate assets.
However, accounts with beneficiary designations pass outside of probate. Executors do not control them. This is why heirs are sometimes surprised to learn that certain accounts bypass the will entirely. Read more choosing executors in our blog, Who Should Be My Executor?
How to Keep Beneficiary Designations Updated
The best way to prevent unwanted outcomes is to make reviewing beneficiary forms part of your estate planning process. In Minnesota, beneficiary designations are binding contracts. Keeping them current ensures they reflect your wishes and work together with your will or trust.
Here are practical steps to follow:
- Review after life changes. Update designations after major events like marriage, divorce, birth, or the death of a loved one.
- Coordinate with your estate plan. Check that your forms align with your will and trust. If they don’t, the forms will override your documents.
- Consider trusts for complex families. For blended families or second marriages, naming a trust as the beneficiary may provide more protection and fairness.
- Communicate your choices. Let your family know how your accounts are set up to reduce confusion later.
Minnesota Note: Minnesota has its own rules regarding beneficiary designations, particularly after significant life events such as divorce. Some accounts follow state law, while others are governed by federal law. Because of these differences, it’s essential to review your plan with an estate planning attorney to ensure everything works together effectively.
Why This Matters for Estate Planning in Minneapolis, MN
Estate planning is about ensuring that every aspect of your financial life works together seamlessly. Families in Minneapolis often hold a mix of retirement accounts, employer benefits, and life insurance policies, each with its own rules.
If even one of those accounts has an outdated beneficiary designation, it can undo the careful planning outlined in a will or trust. That’s why a comprehensive review of all documents and forms is so important. As one Stone Arch client put it: “The process went very smoothly and much less painful than I had envisioned. I feel confident I have made the right plan for me.”
If you haven’t checked your beneficiary forms in years or aren’t sure how they fit with your estate plan, it may be time for a review. Book a call with Stone Arch Law today.
Key Takeaways
- Beneficiary designations override wills in Minnesota and most other states.
- Outdated forms can unintentionally send assets to the wrong person.
- Executors only control probate assets, not accounts with designated beneficiaries.
- Reviewing and coordinating designations is a crucial part of estate planning in Minneapolis, MN.
References: SmartAsset (Aug. 2, 2025). “An Executor’s Responsibilities to Beneficiaries”. And The Spokane Journal (July 31, 2025). “Where the will isn’t always the way”. And U.S. Supreme Court, Egelhoff v. Egelhoff, 532 U.S. 141 (2001).
