When it comes to estate planning in Texas, many people focus on drafting a will or setting up a trust. But one of the most powerful and often overlooked tools is the beneficiary designation. These designations can determine who receives some of your most valuable assets—without going through probate.
At Haugen Law Firm, P.C., we help clients across Denton County and surrounding areas understand how beneficiary designations work and how to align them with their broader estate plans. Here’s what you need to know.
What Is a Beneficiary Designation?
A beneficiary designation is a legal way to name the person(s) who will receive a specific asset upon your death. These designations are commonly used with:
- Life insurance policies
- Retirement accounts (401(k), IRA, etc.)
- Bank accounts (via payable-on-death or POD designations)
- Investment accounts
- Annuities
- Some real estate deeds (through Transfer-on-Death Deeds)
When you name a beneficiary on these types of accounts, the asset passes directly to them after your death—bypassing probate entirely.
Why Beneficiary Designations Are So Important in Texas
Texas law allows many assets to be transferred outside of a will through beneficiary designations. This can save your loved ones significant time, stress, and court costs.
Key Benefits:
- Avoids probate delays
- Private (not part of public court record)
- Fast transfer of funds or property
- Often trumps your will if not aligned
Warning: If your beneficiary designations contradict your will, the designations usually prevail. That’s why it’s critical to coordinate both.
Common Mistakes Texas Residents Make
At Haugen Law Firm, we’ve seen firsthand how overlooked or outdated designations can lead to serious issues. Here are some of the most common mistakes:
- Not naming a beneficiary (or leaving it blank)
- Failing to update after major life events (divorce, death, remarriage, etc.)
- Naming minor children directly (which can require a court-appointed guardian)
- Forgetting contingent beneficiaries (what happens if your primary beneficiary dies before you?)
Even if you have a solid will or trust in place, these mistakes can create legal and financial confusion—and lead to results you never intended.
When Should You Review Your Beneficiary Designations?
It’s a good idea to review your designations:
- After major life changes (marriage, divorce, birth of a child, death in the family)
- When you change jobs or open new financial accounts
- Every 2–3 years as part of routine estate plan updates
We recommend reviewing your estate plan and beneficiary forms at the same time, to ensure everything works together.
Should You Name Your Trust as a Beneficiary?
Sometimes it makes sense to name a revocable living trust as the beneficiary of your accounts—especially if:
- You want more control over when and how assets are distributed
- You have minor or special needs children
- You want to coordinate asset management with other parts of your estate
However, this should be done carefully. Not all accounts are suited for trust beneficiaries, and doing so can create tax consequences if not handled correctly.
Let our estate planning attorneys help you make the right call for your situation.
Work with a Texas Estate Planning Attorney to Get It Right
At Haugen Law Firm, P.C., we’re proud to serve families and individuals across Denton, Collin, Cooke, Dallas, and Tarrant Counties with trusted legal guidance in family law, criminal defense, and estate planning. If you have questions about your legal rights or need personalized support, our dedicated team is here to help. Contact us today!