Most people assume their will is the final word. In Texas, a large share of what you own never passes through your will at all.
Life insurance, retirement accounts, and many bank accounts go to whoever is named on the account’s beneficiary designation, the short form the company asks you to fill out when you open the account. When the beneficiary designation vs will in Texas say different things, the form usually wins, and that catches a lot of families off guard.
In Texas, a Beneficiary Designation Usually Beats Your Will
A will only controls your probate estate, which means the property that has to pass through probate, the court process that confirms a will and puts someone in charge of handing things out.
An account that passes to a beneficiary other than your estate under a valid designation generally skips that process. Texas Estates Code Section 111.052 treats beneficiary and payable-on-death provisions in insurance policies, retirement accounts, and bank accounts as nontestamentary, meaning they work as a contract between you and the company rather than as part of your will.
The company promised to pay the person on its form, and it keeps that promise. So if your will leaves everything to your three children equally, but your life insurance form names only one of them, the insurer pays the one on the form.
That’s why the first step is knowing which of your assets follow a form and which follow your will.
Which Texas Assets Pass By Beneficiary Designation Instead Of Your Will?
Assets covered by a valid beneficiary designation, payable-on-death arrangement, or survivorship agreement generally pass outside your will, unless payable to your estate.
The common ones are life insurance, retirement plans and IRAs, annuities, and accounts marked payable on death (POD) or transfer on death (TOD). A POD account goes to the surviving payee under Texas Estates Code Section 113.152.
Your house can work this way too. Texas lets you sign and record a transfer-on-death deed, a deed that passes your home to the person you name without a probate case. Under Texas Estates Code Section 114.057, a will cannot revoke or override that deed. Revocation generally requires a qualifying later transfer-on-death deed or express revocation instrument, properly acknowledged and recorded before your death in the county where the original deed was recorded. A lifetime sale or other transfer can also affect what passes under the deed. A separate divorce rule is covered below.
Joint bank accounts are the one people get wrong most often. A joint account only goes to the surviving owner if the account agreement includes a signed survivorship clause under Texas Estates Code Section 113.151.
We cover that in more detail in our post on what happens to bank accounts after death in Texas, and our guide to probate assets vs non-probate assets sorts the rest of a typical estate into the two groups.
An Outdated Beneficiary Form is Where Conflicts Can Start
The form was usually filled out years ago, on the first day of a new job or when a policy was bought, and the will got updated later while the form stayed put.
Here’s a hypothetical that shows how this plays out. A Dallas County father updates his will to split everything equally among his three children. The life insurance form he signed before his youngest was born still names only the older two.
When he dies, the youngest child receives an equal share of whatever passes under the will, but nothing from the policy. The will can’t fix it, because the policy was never part of the will.
The fix would have taken a few minutes: a new form sent to the insurer naming all three children.
Married couples should also remember that property acquired during the marriage is generally community property under Texas Family Code Section 3.002. If an IRA form names someone other than your spouse, your spouse may still own half of that IRA. Divorce is the one situation where Texas law steps in on its own.
Texas Divorce Rules Revoke Some Beneficiary Designations, But Not All
Start with your will. Under Texas Estates Code Section 123.001, if you divorce after signing your will, its provisions generally operate as if your ex-spouse (and his or her relatives who are not also your relative) had died before you, unless the will expressly provides otherwise.
For life insurance, Texas Family Code Section 9.301 generally makes a pre-divorce designation of your ex-spouse ineffective. The exceptions are when the divorce decree designates the ex-spouse as beneficiary, if you name them again after the divorce, or when they were named to receive the money in trust for a child. If the designation fails, the money goes to your backup beneficiary, or to your estate if there isn’t one. Section 9.302 applies a similar rule to IRAs and many employer retirement plans, though it does not cover public retirement systems. Texas Estates Code Section 123.151 does the same for payable-on-death and survivorship bank accounts.
A transfer on death deed follows its own rule. Under Section 114.057, if you divorce a beneficiary named in a recorded deed, the divorce judgment revokes the deed as to that ex-spouse only if notice of the judgment is recorded, before your death, in the deed records of the county where the deed is recorded.
The big exception is many workplace retirement plans and employer-provided life insurance. They’re governed by a federal law called ERISA (the Employee Retirement Income Security Act). In Egelhoff v. Egelhoff, the U.S. Supreme Court held that federal law overrides a state rule that automatically removes an ex-spouse from those plans. In Kennedy v. Plan Administrator for DuPont, the Court upheld a plan paying the ex-wife on the form even though she had waived it in the divorce decree.
Federal law also protects a current spouse. Most 401(k) plans generally pay the remaining account balance to your surviving spouse unless your spouse validly consented to another beneficiary. Pension plans commonly protect spouses through survivor-annuity benefits. Under 29 U.S.C. Section 1055, required spousal consent generally must be written and witnessed by a notary or plan representative. The precise requirements depend on the plan and applicable law.
The only reliable step after a divorce or remarriage is updating every form yourself. After divorce or remarriage, review every beneficiary designation alongside any applicable divorce decree, qualified domestic relations order (QDRO), and plan requirements. A QDRO may establish rights to retirement benefits that a beneficiary change cannot eliminate. Submit any needed changes through the company’s required process and confirm they were processed.
Our post on why you shouldn’t overlook life insurance after divorce goes deeper on the policy side.
What Happens When A Beneficiary Dies First or Is A Minor?
If your only named beneficiary dies before you and you never named a backup, called a contingent beneficiary, the money goes to whatever default the policy or account terms set, which is often your estate. That pulls it right back into probate, the exact process the form was meant to avoid. Our Dallas probate lawyer page walks through that process.
Naming a child under 18 creates a different problem. Insurers and account companies generally won’t hand a large sum directly to a minor. A court may need to appoint a guardian of the estate, the person a judge puts in charge of a child’s money, through the process in Texas Estates Code Chapter 1101.
Many families name a trust for the child instead, an arrangement where a person you choose, the trustee, manages money for someone else. It can hold the money until the child is older, on terms you set now.
Beneficiary and Will Disputes in Dallas, Collin, and Kaufman County Courts
A Texas probate case is generally opened in the county where the person lived when they died, under Texas Estates Code Section 33.001. Different rules apply to out-of-state residents or depend on the asset involved.
Dallas County. Dallas County has three statutory probate courts, meaning courts that only handle probate, guardianship, and related cases: Probate Court No. 1, No. 2, and No. 3. All three sit on the 7th floor of the George Allen Courts Building at 600 Commerce Street in Dallas, and filings go through the Dallas County Clerk.
Collin County (Frisco). Frisco straddles Collin and Denton counties. Collin County has one statutory probate court, Probate Court No. 1, in the Russell A. Steindam Courts Building at 2100 Bloomdale Road in McKinney. A Frisco family on the Collin side files there.
Our Dallas estate planning team works with Frisco families.
Kaufman County (Terrell). Kaufman County has no statutory probate court. Probate and guardianship cases are heard by County Court at Law No. 2 and the County Judge, with the County Clerk acting as clerk of court, at the Justice Center, 1902 E. US Highway 175 in Kaufman.
In any of these courts, a judge generally can’t rewrite a beneficiary form because your will says something different.
A Beneficiary Review Keeps Your Will and Your Forms in Step
A beneficiary review means pulling the current beneficiary on every account, policy, and deed, then reading them side by side with your will. Here are the steps:
1. List every life insurance policy, retirement account, annuity, bank account, and brokerage account you own.
2. Ask each company for a copy of the beneficiary form it actually has on file.
3. Confirm that the primary and contingent beneficiaries, their percentages, and any trust designations carry out your overall estate plan. The beneficiaries do not necessarily need to be the same people named in your will.
4. Send any needed changes using each company’s required process, confirm the changes were processed, and keep copies of the designations and confirmations with your Will.
Repeat it after any big life event (marriage, divorce, a birth, a death in the family) and every few years otherwise. Our wills and trusts attorneys build this review into every plan, because one outdated form can undercut a carefully drafted will. Here are the questions we hear most.
What do Texas families Ask About Beneficiary Designations and Wills?
Can I change a beneficiary designation through a provision in my Will?
Usually not. Texas law allows a designation to be made in a separate writing, but only if the policy or account terms permit it, and most companies only accept their own form. It is best to always ask the company how they accept beneficiary designations and ensure they receive a copy of your designations in your lifetime.
Does a beneficiary designation avoid probate in Texas?
Yes, as long as a named beneficiary is alive and able to receive the money. For anything not covered by a beneficiary designation form or a Will, our post on what happens if you die without a will in Texas explains how Texas law decides.
Do I need a lawyer to update a beneficiary form?
Not usually, since the form comes from the company. However, where there are provisions that the form doesn’t provide for, it can be necessary for an attorney to customise an attachment to the beneficiary designation form explaining your wishes.
If you found this useful, you might also like our guide on whether probate can be avoided in Texas.
If you’re in Kaufman County or nearby, our Terrell estate planning attorney page shows how we help families coordinate their Will and beneficiary forms. Dallas and Collin County families can reach out to our Dallas office.
