On occasion, the practice of law is analogous to a game of Rock, Paper, Scissors. Certain combinations dictate a winner. In estate planning, Rock, Paper, Scissors is often played in regard to accounts’ beneficiary designations versus the will’s dictates. If an account’s beneficiary designation says one thing and the account holder’s will says another, who wins the game?

Generally speaking, the person listed on the account’s beneficiary designation form will be the winner. For example, suppose Andy Account Holder has a beneficiary designation on his $1 million dollar bank account, indicating that the account will be distributed to his girlfriend Molly upon his death. However, Andy’s will says that all of his assets are to be distributed to his two adult children in equal shares. In that scenario, Molly wins the game and will receive the proceeds of Andy’s bank account. Because of this result, a critical part of a client’s estate planning process is to review all of their beneficiary designations on bank accounts, investment and retirement accounts, and life insurance policies to ensure that the proper people are listed, in the proper order, and that the distribution of these assets, known as “non-probate assets,” coordinates well with the “probate assets” that will be distributed pursuant to the will.

The rules of the game are set forth in RCW 11.11.020. This statute states:

Disposition of nonprobate assets under will.

(1) Subject to community property rights, upon the death of an owner the owner’s interest in any nonprobate asset specifically referred to in the owner’s will belongs to the testamentary beneficiary named to receive the nonprobate asset, notwithstanding the rights of any beneficiary designated before the date of the will.

(2) A general residuary gift in an owner’s will, or a will making general disposition of all of the owner’s property, does not entitle the devisees or legatees to receive nonprobate assets of the owner.

(3) A disposition in a will of the owner’s interest in “all nonprobate assets” or of all of a category of nonprobate asset under RCW 11.11.010(7), such as “all of my payable on death bank accounts” or similar language, is deemed to be a disposition of all the nonprobate assets the beneficiaries of which are designated before the date of the will.

(4) If the owner designates a beneficiary for a nonprobate asset after the date of the will, the specific provisions in the will that attempt to control the disposition of that asset do not govern the disposition of that nonprobate asset, even if the subsequent beneficiary designation is later revoked. If the owner revokes the later beneficiary designation, and there is no other provision controlling the disposition of the asset, the asset shall be treated as any other general asset of the owner’s estate, subject to disposition under the other applicable provisions of the will. A beneficiary designation with respect to an asset that renews without the signature of the owner is deemed to have been made on the date on which the account was first opened.

As you can see, RCW 11.11.020 can be a bit tricky. In essence:

  • If Andy’s will says, “All of my assets should be distributed to my two children in equal shares” – that’s not enough to cause his bank account to be distributed to his two children rather than Molly.
  • But if Andy’s will says, “All of my assets, including all of my payable on death bank accounts, should be distributed to my two children in equal shares” – then the bank account likely will be distributed to the two children.
  • And if Andy, after signing his will, goes over to the bank and changes the beneficiary designation on his account from Molly over to his new girlfriend, Ruth, Ruth will be the winner in that scenario.

If you need help sorting out the rules, please let us know. We’d be happy to help.

This post is for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon in regard to any particular facts or circumstances without first consulting with an attorney.

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