Hey everyone! Chris Parker and Kristen Ishihara here of Ishihara and Parker Law Firm. Today, we’re talking about something that a lot of people either don’t think about or accidentally mess up—beneficiary designations! We’re talking about Transfer on Death (TOD), Payable on Death (POD), and other beneficiary setups on your accounts.

What Are These Beneficiary Designations Anyway?

So, different places call them different things, but they all serve the same purpose: making sure your money and assets go to the right person when you pass away.

• POD (Payable on Death) – Used by banks for checking and savings accounts.
• TOD (Transfer on Death) – Common for investment accounts.
• Beneficiary Designations – Used for retirement accounts, life insurance, and similar assets.

Essentially, these allow you to say, “When I pass, give this account to this person.” Most places even let you add backup beneficiaries in case the first person you named passes before you.

When Should You Use Them?

Most of the time, using these designations is a great idea. If you have a straightforward situation—like you’re married with adult kids—it makes sense to set it up where your spouse gets everything first, and if they pass before you, it goes to your kids, split evenly.

But there are times when you should NOT use a beneficiary designation:

1. Minors – You don’t want to name a child directly because they legally can’t manage the money. That can create a legal mess.
2. Disabled Individuals – Inheriting directly could mess up their government benefits. Special planning is needed.
3. Outdated Beneficiaries – If you’ve gone through a divorce or other major life changes, you must update these! Otherwise, an ex or someone no longer in your life might end up with your money.

Check Your Beneficiaries – Every Year!

People often set these up and forget about them. That’s a big mistake. Imagine naming your mom as a beneficiary 20 years ago when you started your job, but now you’re married with kids. If something happens to you, that money is going to your mom, not your spouse and kids.

And here’s another thing—just because you sent in a change request doesn’t mean the financial institution actually updated it. We’ve seen cases where people had emails proving they requested a change, but the company never updated it. Always call and confirm!

What Happens If You Don’t Have a Beneficiary?

If there’s no beneficiary listed (or the one you named has already passed), things get complicated:

• The financial institution will freeze the account until proof is provided of who should inherit.
• If you have a will, it will go through the probate process.
• If you don’t have a will, Texas law decides who gets it—which may not be who you intended.

Bottom line: You still need a will, even if you have beneficiary designations!

Your Will Does NOT Override Beneficiaries

A common mistake we see is people assuming that their will controls everything. It doesn’t.

Let’s say your will says, “I leave everything to my daughter, Sarah,” but your bank account has your son, Mike, listed as the beneficiary. Guess what? The bank is giving that money to Mike. Your will doesn’t change that. The beneficiary always controls what happens to the account.

Some people do this on purpose—maybe they want to leave a little extra to one child privately. That’s fine, as long as it’s intentional. Just don’t let it happen by accident!

Make It a Habit: Check Your Beneficiaries Every Year

Take five minutes once a year to check all your financial accounts:

• Bank accounts
• Life insurance
• Retirement accounts
• Investment accounts

Make sure the right people are listed and that everything is in order. It’s quick, free, and could prevent a huge headache later.

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We can’t stress this enough—beneficiary designations are one of the easiest things you can update, but if they’re wrong, they can completely change where your money goes. Take a few minutes today to check yours. It’s worth it!

Have questions? Need help with a will or estate planning? Reach out to us at Ishihara and Parker Law Firm—we’re happy to help!

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