There are several methods available to leave assets to loved ones at the time of death:  A will, a trust, payable on death designations, life insurance policy beneficiary designations and qualified plan (IRA, 401(k), etc.) beneficiary designations.  Contrary to public belief, there is no specific “right” to inherit from a parent if their estate is intentionally planned to exclude a child (children).  In Texas, there is no legal obligation to leave any property to one’s children at the time of death.  However, in the vast majority of estate plans, the children are the beneficiaries, whether as an outright gift at the time of death or to have their gift held in trust.

Is this fair?

In the above example, even though his Will states that it leaves absolutely everything he has to the beneficiaries named in the Will, the Will controls only property that is considered to be “probate property”.  Assets that can be transferred at the time of death pursuant to a beneficiary designation will be paid directly to that named beneficiary and will not be controlled by the terms of the person’s Will.  The same is true for life insurance policy designations and other financial institution payable on death beneficiary designations.   Individuals who, because they are named as beneficiaries in a parent’s Will and think their inheritance is secure, are often surprised when beneficiary designations from retirement plan benefits, life insurance and payable on death provisions at banks and financial institutions as well as provisions in a living trust, control a decedent’s property and can leave the beneficiaries of a Will with virtually nothing as of the time of the loved one’s death.