Does a beneficiary designation override a will? A 1996 Florida Supreme Court case over about $100,000 shows why, and where the divorce rule stops.
Does a beneficiary designation override a will? Yes, and a 1996 Florida Supreme Court case over roughly $100,000 of life insurance, where the divorce settlement never mentioned the policies, was decided on the plain language of the policy alone. The same rule governs a 401(k), an IRA beneficiary, an annuity and any pay on death or transfer on death account.
The episode covers what section 732.703 voids after a divorce for anyone who dies on or after July 1, 2012, why it does not reach most employer plans, why a bank that never learned of the divorce can still pay the old beneficiary, and what belongs on each line of a beneficiary designation form, primary and contingent.
Does a will override a beneficiary on a 401k? No, the plan pays whoever is named on the form. Does a will override life insurance beneficiaries? No, for the same reason. The StepUpLaw guide lays out the review.
Transcript
In July of 1992, a Florida man divorced his wife. Their settlement released every claim they had against each other and said nothing at all about his two life insurance policies, both of which still named her the primary beneficiary. That December, he changed the beneficiary on one of the two policies. He left the other one exactly as it was. He died the next month. His sister and his former wife both claimed the money, roughly a hundred thousand dollars, and the case went all the way to the Florida Supreme Court.
The question at the center of that case is one I get from clients constantly. What actually controls who gets your money when you die, the will or the form sitting at your bank, your insurer, or your retirement plan. This episode covers three things. What a beneficiary form controls and what it does not. What happens to that form after a divorce, and where Florida’s fix stops working. And what happens when nobody named a backup.
The Florida Supreme Court’s answer in that 1996 case was short. To figure out who the man intended as his beneficiary, the court said, you look no further than the plain language of the policy itself. The settlement did not decide it. The policy did.
That rule reaches further than life insurance. Your 401(k), your IRA, your annuities, and any account you set up as payable on death or transfer on death all pass the same way, directly to whoever is named on the form, the moment you die. None of that runs through your will or your trust. A will that leaves everything to your four children does nothing for the three who are not named on the account.
Florida does try to fix the most common version of this mistake. Under section 732.703, a designation naming a former spouse is voided the moment the marriage is dissolved, for anyone who dies on or after July 1, 2012, no matter when the form was signed. The former spouse is treated as if they died before you did, and the money moves to whoever is next in line.
Florida’s fix does not reach every account, and the one it misses is often the largest one you own. The statute yields wherever federal law says otherwise, and federal law does say otherwise for a 401(k), a pension, or almost any employer plan. The United States Supreme Court has twice held that the plan administrator pays whoever is named on the form, ex-spouse included. Your IRA is covered by the Florida rule. Your 401(k) usually is not.
The rule has a second limit, smaller but just as costly. Even on an account the Florida rule does cover, a bank or an insurer that never learned about the divorce can pay the old beneficiary before anyone objects. Getting that money back afterward takes a lawsuit against the person who received it, not a phone call to the company that already paid it out.
The form has two lines, not one, and the second line gets skipped constantly. The primary beneficiary is first in line. The contingent, or backup, beneficiary only takes if the primary has already died. Name only one person, and if that person dies before you do, the account can fall back into your probate estate, the exact result the form was supposed to avoid.
Naming your own estate as the beneficiary looks like the simple fix, and it is usually the wrong one. It sends the asset through probate, the very process the form was supposed to skip, and on a retirement account it can also speed up the income tax the account owes. A person is almost always the better choice, and where a person cannot manage the money well, a properly drafted trust can hold it instead, built around the federal ten-year payout rule that now applies to most inherited retirement accounts.
The same mistake shows up again when the beneficiary is a minor. Naming a grandchild directly on a life insurance policy or an account feels simple until the money is actually due. An insurer will not hand a large sum to a child, and above a modest amount Florida requires a guardianship, a judge, and ongoing court oversight until that child turns eighteen. A trust, or an adult holding the money under Florida’s transfers to minors law, avoids all of it as the named backup instead.
None of this means your will does not matter. Property titled in your name alone, with no beneficiary or survivorship feature attached to it, still passes under your will or your trust. The point is narrower than that. The plan you built with your lawyer only works if the forms at your bank, your insurer, and your retirement plan actually agree with it.
The fix is not a new document. It is checking the ones you already have. Pull the current beneficiary confirmation on every retirement account, every life insurance policy, and every payable on death or transfer on death account you own. Confirm who is named as primary and who is named as contingent on each one, and confirm the confirmation itself is recent.
Then check each name against your actual life. A marriage, a divorce, a birth, or a death in the family means every one of those forms needs a second look, not just the will. If a 401(k) or a pension is in the mix, do not assume Florida’s divorce rule already handled it. Call the plan administrator and change the form yourself.
That is the whole exercise, and it takes less time than most people think. Pull the forms, read the names on them, and match them against the plan your lawyer already built. My firm does exactly this review, account by account, and lines every form up with the will or the trust behind it, so the plan you think you have is the one that actually pays. If it has been more than a couple of years since anyone looked at those forms, that is the thing to do this week.
Read the full guide at stepuplaw.com/florida-beneficiary-designations
Related reading and listening at StepUpLaw
- Will and Beneficiaries After Divorce in Florida
- What Happens to Your IRA or 401(k) When You Die?
- Payable on Death and TOD Accounts in Florida
- Episode 8, No Spouse, No Kids. Leaving Your Estate to Charity in Florida
- Episode 19, Can You Disinherit Your Spouse in Florida?
- Episode 15, Does Your Florida Estate Qualify for Summary Administration
Related guides
- Will and Beneficiaries After Divorce in Florida
- What Happens to Your IRA or 401(k) When You Die?
- Payable on Death and TOD Accounts in Florida
Stepping Up is hosted by Kevin D. Klagge, Esq., Fla. Bar No. 99502. Attorney Kevin Klagge represents families, businesses, and international clients in estate and tax planning, business structuring, and international law, with a focus on Florida legal tools. He litigates estate and business issues in court. Episodes are general information about Florida law, not legal advice, and listening does not create an attorney-client relationship.
