Annuity Beneficiary vs. Will

Shawn Plummer

CEO, The Annuity Expert

What is an Annuity Beneficiary?

An annuity beneficiary is a person or entity designated to receive the benefits of an annuity contract after the annuity owner passes away. This beneficiary designation is specific to the annuity contract and is independent of a will or trust.

What is a Will?

A will is a legal document where a person, the testator, states their wishes about how their property is to be distributed at death and names an executor to manage the estate until its final distribution.

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Key Differences

  1. Specificity: An annuity beneficiary designation applies specifically to the annuity contract, while a will covers a broader range of assets.
  2. Probate Process: An annuity passes directly to the beneficiary, bypassing probate. Assets distributed through a will generally go through probate.
  3. Overrides: The beneficiary named in an annuity contract typically overrides any conflicting instructions in a will regarding the annuity.
  4. Changeability: Annuity beneficiaries can usually be changed unless the annuity is irrevocable. Wills can also be amended through codicils or by drafting a new will.

Examples

  • Annuity Beneficiary: John names his daughter as the beneficiary of his annuity. Upon John’s death, she directly receives the annuity benefits, irrespective of his will.
  • Will: John states in his will that his son should inherit all his financial assets. However, this will not affect the annuity specifically designated to his daughter.

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Comparison Between Annuity Beneficiary and Will

FeatureAnnuity BeneficiaryWill
CoverageSpecific to annuityAll assets
ProbateBypasses probateUsually goes through probate
OverridesOverrides will for annuityCan be overridden by annuity designation
Change FlexibilityOften changeableAmendable through codicils or new will

Conclusion

Understanding the difference between an annuity beneficiary and a will is crucial for effective estate planning. An annuity beneficiary is specific and bypasses probate, while a will covers all assets but usually requires probate. It’s important to align these documents to ensure your assets are distributed as intended. Contact us today for a free quote.

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Shawn Plummer

CEO, The Annuity Expert

Shawn Plummer is a licensed financial professional, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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