does a trust override a beneficiary on a bank account

When organizing an estate plan, it's essential to make sure everything is set up to reflect your intentions. A frequent issue that comes up is understanding how a will or a trust interacts with a named beneficiary on a bank account. Specifically, who holds priority when both are in place?

Imagine you've set up a will or a trust to handle your assets after you're gone. You've also designated a beneficiary on your bank account—maybe your child or spouse. These decisions might seem like they'd work together seamlessly, but things can get tricky if they're not properly coordinated.

Let's break down how Georgia law handles this situation.

What Is a Beneficiary Designation?

A beneficiary designation is simply a way of deciding who gets certain assets after you pass away, without those assets having to go through probate. For bank accounts, this is often called a "payable-on-death" (POD) account. 

If you've named someone as the beneficiary on your POD account, the bank transfers the money in that account directly to the person you named when you pass away. The process is straightforward and avoids probate, which is why many people choose this route.

In Georgia, beneficiary designations on accounts like bank accounts, life insurance policies, and retirement accounts generally take precedence over what's written in a will or another document.  

So, if you've named your son as the beneficiary on your bank account, but your will says that everything should go to your daughter, your son still gets the funds in that bank account. This is important to keep in mind if you want your estate plan to reflect your true intentions.

How Does a Trust Work in Georgia Estate Planning?

A trust is a legal tool that allows you to manage your assets while you're alive and dictate how they should be distributed after you pass away. There are different types of trusts, but the most common ones are revocable and irrevocable trusts. 

With a revocable trust, you can make changes while you're still alive. Irrevocable trusts, on the other hand, are set in stone once they're created.

Trusts are great for managing complex estates or ensuring that your assets are distributed in a specific way. They can be used to protect assets, reduce estate taxes, or even take care of a family member with special needs.

But here's the key point: trusts do not automatically override beneficiary designations on a bank account in Georgia.

What Happens When a Trust and a Beneficiary Designation Conflict?

If you have a pay on death beneficiary named on your bank account, you might assume that the trust will control what happens to the money. But in Georgia, the POD beneficiary designation on the account controls.   

That means if you've named your spouse as the beneficiary on your POD account, the money in that account will go to them, even if your trust says something different.

When we're working with our clients, we're generally going to advise them to have their bank account in the name of the trust (such that the trust owns the account), and then, upon the client's death, the trust controls what happens to those funds, ensuring the client's wishes are known and followed. Assets in a trust avoid probate, so the trust distributing assets can be done in a timely, and private, manner. 

How to Coordinate Trusts and Beneficiary Designations

To avoid conflicts and ensure that your estate plan reflects your wishes, it's important to coordinate your will or trust and beneficiary designations. 

It's also a good idea to review your beneficiary designations regularly. Life changes—like marriage, divorce, or the birth of a child—can affect how you want to inherit your assets. If you update your will or trust, check your beneficiary designations to make sure they're aligned.

Potential Conflicts and Legal Disputes

Sometimes, conflicting instructions in a will, trust, or beneficiary designation can lead to unintended consequences—or worse, legal battles. 

For example, if your will leaves everything to your children, but you forgot to update the beneficiary on your POD account after remarrying, your new spouse could end up with the bank account while your children receive nothing from that asset.

These kinds of conflicts can be emotionally and financially draining for your loved ones. This is why it's so important to work with an experienced estate planning attorney who can help you avoid mistakes and ensure that all your documents work together smoothly.

Avoiding Conflicts in Your Estate Plan

The best way to avoid conflicts between a will or trust and beneficiary designations is to work with a knowledgeable estate planning attorney. 

At Peach State Wills & Trusts, we have years of experience helping Georgia families clearly understand and deal with these tricky situations so they can avoid mistakes that lead to unintended outcomes.

Contact Peach State Wills & Trusts Today

Estate planning can be complicated, but you don't have to figure it out on your own. If you'd like to learn more about estate planning, feel free to download our free guide—no strings attached.

At Peach State Wills & Trusts, we're here to help you make sure your wishes are honored. Our team is dedicated to providing stress-free, personalized estate planning services that give you peace of mind.

If you're in Georgia and have questions about coordinating your trust and beneficiary designations, or if you want to review your current estate plan, we're here to help. Call us today at (678) 344-5342 for a free consultation or fill out our online form.