How to Choose a Will Beneficiary: What You Need to Know

A last will and testament is a powerful tool to help protect your family. From choosing a guardian for your kids to passing along your cherished baseball card collection, a will makes your wishes known. The beneficiary of a will is the person who’ll inherit your assets when you die—that can include cash, property and other belongings. Deciding whom to choose can be a sensitive question, so we’re here to help you get started.

What Is the "Beneficiary of a Will?

A will beneficiary is the person who’ll inherit from your estate when you die. You can name (or exclude) whomever you want and divide your estate in a way that works best for you. Close relatives like a spouse and kids are often the top choices for beneficiaries. You don’t need to stop at close relatives, though. You can name friends, a business partner or even charitable organizations to receive property from your estate. One important note: Pets may be part of the family, but legally speaking, they’re property. You can’t leave money or property directly to an animal. If you’re concerned about leaving funds for your beloved pet, some options may be to choose a pet guardian ahead of time and discussing leaving them money to cover pet care, or possibly opening a trust with conditions specifying that the money be used to provide for your pet’s needs. Many people want to know: Can an executor of a will be a beneficiary? The short answer is yes. It’s actually pretty common for the executor to also be the will beneficiary. If you have questions about writing your will, it’s a good idea to speak to an estate planning attorney, especially if you’d like to set up complex instructions. If you don’t have the time or money to meet with a lawyer right now, however, our simple online will can help you document your wishes for free, in minutes.

Can’t the Courts Just Figure It Out When I’m Gone?

If you die without a will, any accounts without a transfer-on-death or payable-on-death (POD) beneficiary will go through your state’s intestate laws (“intestate” means dying without a will in place). States follow their own hierarchy to find your next of kin. Generally, your estate goes to a spouse first, then your kids, your parents or siblings and so on. One of the advantages of writing a will is that you don’t have to follow your state’s defined order.

For example: If you financially help any friends or extended family, they may be in a tough place if you don’t have a will. If intestate laws recognize someone else first, that legal heir has no obligation to give anything to your other friends or family. The probate process, which is the public legal procedure of distributing an estate, also tends to drag out longer when there’s no will. If you have kids and die without a will, the court would have to get involved to appoint guardians and financial custodians or trustees for your kids. Being proactive with your plans allows you to clearly state your wishes.

Choosing a Child as a Will Beneficiary

Many people don’t even think about writing a will until they have kids. But minors can’t legally inherit property until they come of age, so you need to take some extra measures to set up their inheritance. Some options to do this are to set up a trust fund or Uniform Transfers to Minors Act/Uniform Gifts to Minors Act (UTMA/UGMA) account. The benefit of doing this in advance is you can name the person you’d like to act as trustee, as well as set up any other requirements. State laws generally let minors inherit a UTMA account at age 18 or 21. With a trust, you may have more control to stagger or extend the age of inheritance. For example, having minors inherit at age 25 can prevent a sudden influx of funds from affecting a college financial aid package. If you have dependents who will need lifelong care (for example, a special needs child), you can ensure your will has detailed instructions for their ongoing needs. By a similar token, it can also be problematic to appoint your minor child as your life insurance beneficiary. If you die before your child is old enough to legally take control of the money, a court may need to get involved to set up some form of custodial account.

7 Steps to Choosing a Beneficiary of a Will

When choosing a beneficiary for your will, follow these basic steps to feel more confident in your plans:

1. Get your will in place! 

Writing your will doesn’t have to be complicated. Your will is one of the most important tools to protect your family’s security by expressing your instructions clearly and giving courts a legal plan to follow. Leaving a will can also give your family the comfort of knowing they’re respecting your wishes. You can help your loved ones avoid painful confusion and conflict, and make sure that you’re leaving your legacy to the people who are closest to you, even if they wouldn’t appear on your state’s intestate list of heirs.

2. Don’t assume tour will overrules other instructions

If you’ve named a beneficiary on your life insurance policy, or chosen a beneficiary to inherit your savings through a POD bank account, those beneficiaries get the money even if your will says something else. The beneficiary designation holds higher legal weight than either a will or state intestate laws, so these accounts stay out of the probate process altogether.

3. Update all your financial accounts

Life is full of changes. Leaving an ex on your will, or forgetting to add a child or another loved one, can mean that your legal documents no longer reflect your current wishes. Update your will and other beneficiary accounts whenever your financial priorities change.

4. Consider contingencies

You can choose more than one primary beneficiary for your will, if you want multiple people to inherit portions of your estate. It’s common to want to leave certain property to your spouse, some to your kids and some to other relatives or friends, for example.

Contingent beneficiaries only inherit property if your primary beneficiaries have passed away. It can be worth thinking about your preferred backup plans if your closest loved ones aren’t able to inherit their portion. For example, at what point would you rather leave your estate to a charity or friend than a distant relative way out in your extended family tree?

5. Consider using ‘per capita’ and ‘per stirpes’

Life is unpredictable. Certain instructions help cover unforeseen situations. “Per capita” instructions can split inheritance evenly between members of the same generation, like children or grandchildren (this may help keep you covered if you forget to update names on the will after a new grandbaby is born). “Per stirpes” says that if your beneficiary dies before they can inherit, their portion goes down the line to their children instead. This might be a way for you to ensure your children’s families get an inheritance. An estate planning attorney can explain some legal terms in more depth and help you consider the pros and cons of including some of these stipulations in your will.

6. Pay the executor

Your will also allows you to name an executor, or the person responsible for handling the logistics of distributing your estate. State law or your will can name the fee the executor can collect for their work and expenses. The wishes you state in your will generally count the most, so you can name the terms you think are fair.

7. Bring questions to your lawyer

Run any questions by a legal professional. For example: If you leave money to your best friend but you both pass away in the same accident, would your best friend’s portion revert back to your estate, or go into theirs? State laws vary on how to handle this and other situations. Choosing beneficiaries for your will is a highly individual decision. What works for one person or family might look completely different from another. Choosing a beneficiary for your will may even be an opportunity to reflect on who you consider closest to you, and who depends on you the most. However you decide to divide your estate, reflecting your priorities in your will is an important part of the legacy you leave for your loved ones.

Fabric exists to help young families master their money. Our articles abide by strict editorial standards.

Information provided is general and educational in nature, is not financial advice, and all products or services discussed may not be offered by Fabric by Gerber Life  (“the Company”). The information is not intended to be, and should not be construed as, legal or tax advice. The Company does not provide legal or tax advice. Consult an attorney or tax advisor regarding your specific legal or tax situation. Laws of a specific state or laws relevant to a particular situation may affect the applicability, accuracy, or completeness of this information. Federal and state laws and regulations are complex and are subject to change. The Company makes no warranties with regard to the information or results obtained by its use. The Company disclaims any liability arising out of your use of, or reliance on, the information. The views and opinions of third-party content providers are solely those of the author and not Fabric by Gerber Life.