When you have a will, it’s easy to think your assets will go exactly where you want. However, in Nevada, beneficiary designations often control over your will for certain assets. Retirement accounts, life insurance, and payable-on-death (POD) accounts go directly to the person named. This bypasses your will and probate.
What you need to name
Most accounts let you name two types of beneficiaries:
- Primary beneficiaries: These individuals (or trusts) receive the asset first.
- Contingent beneficiaries: These are your “backup” in case your primary beneficiary passes away before you do.
If you do not name a contingent beneficiary, the asset may pass according to the account’s default terms, which in some cases could include your estate and require probate. Even with simpler procedures, probate can still take time and cost money.
How to update your designations
To update your beneficiaries, contact each financial institution and request a change form. Submit it with both primary and contingent beneficiaries listed. Keep a copy and confirm the change. Update each account separately.
When to review your designations
Review your designations after major life events:
- Marriage, divorce or remarriage
- Birth or adoption of a child
- Death of a beneficiary
- A beneficiary becoming disabled or using government benefits
- Moving to a new state, including Nevada
Even without major changes, review your designations every three to five years.
What Nevada law does and does not do automatically
Nevada law offers important—but limited—protection after divorce. In general, Nevada law provides that divorce revokes revocable transfers to a former spouse under wills and many nonprobate arrangements, such as beneficiary designations, unless a governing document, court order, or agreement provides otherwise.
However, this change is not always automatic in practice. For example, a life insurance company may pay a former spouse if it does not receive notice of the divorce in time. In that case, the company may not be liable. You should still update your designations directly.
Federal law (ERISA) governs many employer-sponsored plans, such as 401(k)s. For those plans, administrators generally must follow the beneficiary designation on file, even after divorce. As a result, a former spouse may still receive the funds if listed as a beneficiary.
In some cases, however, Nevada law may allow the intended beneficiary to seek recovery after the distribution.
Make sure everything works together
Your beneficiary forms, your will and your trust need to tell the same story. When a conflict exists, the beneficiary designation typically controls. Because the rules can vary depending on the type of account and governing law, reviewing your beneficiary designations with an estate planning professional can help avoid unintended outcomes.