In a word, yes - but why should you care? Beneficiary (or "transfer-on-death designations") often have the final word even if you name who you want to inherit your money in a will. The precedence of beneficiary designations over a will means that keeping your beneficiary forms up to date is crucial to comprehensive estate planning. 

Beneficiary designations are legal instructions for financial accounts like bank or retirement accounts. As contracts between you and the institution, they bypass probate entirely. 

Key features:

• The owner keeps full control during their lifetime; beneficiaries have no access until death. 
• They're revocable and changeable anytime while the owner is alive.
• They transfer outside of wills and trusts but might still face taxes or creditor claims. 
• Unlike a will, which becomes public once filed in probate court, beneficiary designations remain private. 

Common Assets with Beneficiary Designations

• Life insurance policies
• Annuities
• Retirement accounts (401(k)s, 403(b)s, IRAs (both Traditional and Roth)
• Employer benefits: pension plans, stock options, or deferred compensation
• Payable‑on‑death (POD) and transfer‑on‑death (TOD) accounts (bank accounts, brokerage accounts, certificates of deposit, etc.)

Some assets, once cashed out or distributed, might be taxable, like traditional IRAs, cryptocurrency, or health savings accounts (HSAs) going to a non-spouse beneficiary. An estate planning attorney and a financial advisor can provide valuable guidance according to Maine law.

Real estate: In Maine and other states, you may file a revocable transfer-on-death (TOD) deed to name beneficiaries who will receive the property directly upon your death, bypassing probate. In Maine, for this to be valid, you must record the deed with your local registry of deeds. 

If you own property with someone under "joint tenants with right of survivorship," it automatically passes to the surviving owner first. In this case, a TOD deed acts as a "plan B," ensuring that when the last owner dies, the property still avoids probate and goes directly to the beneficiaries.

The Basics of Beneficiary Designations

1. Your beneficiary form controls distribution (despite what a will might say).
2. Without a named beneficiary, the account might go to probate to determine the heirs, causing potential delays. Your loved ones could end up disputing any court decisions. And depending on state laws, the money could become taxable upon distribution.
3. Name beneficiaries you trust to handle money wisely. You may designate an adult, an organization, or even a trust. If family dynamics are tricky, consider who you don't want to have access to the funds. Minors can't inherit money directly; the court might appoint a "custodian" as the money manager — possibly someone you wouldn't choose. Another option, depending on your situation, is to set up a trust to control spending or prevent the loss of benefits, especially for children, younger adults, or people with disabilities. 
4. Name backup beneficiaries. If your primary beneficiary dies, naming other beneficiaries (known as "contingent" beneficiaries) can ease the transition process. 
5. Be sure that the beneficiary designations on financial accounts are consistent with your overall estate plan. 

Terms that can appear on beneficiary forms:

• Per stirpes (by the branch): If your beneficiary dies before you, their share goes to their children.
• Per capita (by the head): If your beneficiary dies before you, their share is split among your other surviving beneficiaries.
• Revocable beneficiary: Can be changed by the account owner at any time.
• Irrevocable beneficiary: Requires the beneficiary's consent for any changes after being designated.

How to Set Up or Update Beneficiary Forms

People often pass away without having updated their beneficiary forms, and sometimes never fill them out. 

Setting up beneficiaries on financial accounts can often be done online; complete them as instructed by the institution.

1. List your bank, investment, retirement, insurance, or even cryptocurrency accounts. 
2. Decide who should be named a beneficiary. Consider contingent beneficiaries. Discuss your plans with them. You might need their dates of birth and Social Security numbers. If you've already named beneficiaries, confirm their information is current. If you're naming multiple beneficiaries, clearly indicate the percentage of the asset each should receive. 
3. Update or set up the designations: contact your institution or log in to their online portal. For employer plans or insurance, you might need to mail forms. Keep copies for your records. Confirm with the institution that the changes have been processed correctly. 

Review your beneficiary designations regularly, along with your entire estate plan. The beginning or end of every year or every birthday can serve as reminders.

Questions for a review: Did any of these happen in the last 12 months?

• A marriage or divorce (leaving an ex-spouse as a beneficiary on an account is a common reason for an ex's "accidental" inheritance). 401(k)s and some 403(b)s are subject to federal law.  In many cases, these rules give a spouse automatic rights and can even leave an ex-spouse in place after a divorce, regardless of state law.
• A birth or adoption
• The death of a beneficiary (Do you have a "contingent" or backup named?)
• A "falling out" (If you no longer speak to your sister, is she still getting your 401(k)?)

Taking a few moments to check and update your beneficiary forms ensures your wishes will be carried out the way you intend.

The rules of beneficiary designations can be complex. Skilled legal guidance helps you avoid unintended consequences and protect your loved ones' interests. Contact us online or call (207) 377-3966.