The Hidden Risk in Your Nebraska Estate Plan: Outdated Beneficiary Designations

You may have created a will or trust to protect your family, but a few overlooked forms could undo everything. In Nebraska, beneficiary designations on retirement accounts, life insurance, and bank or investment accounts carry incredible power. They allow assets to bypass probate and go directly to your chosen beneficiaries—but they also override your will. If outdated or inconsistent, they can accidentally disinherit someone or send your assets where you never intended. This guide explains how beneficiary designations work in Nebraska, why the SECURE Act changed the rules for retirement accounts, and what you should do to make sure your entire plan works together the way you expect.

Executive Summary

• Beneficiary designations override your will. They are binding contracts with financial institutions and control who inherits the asset.

• They avoid probate. Properly designated assets transfer directly and privately to your chosen beneficiaries.

• Regular reviews are essential. Life events like marriage, divorce, births, or deaths require immediate updates.

• Retirement accounts have special rules. Under the SECURE Act, most non-spouse heirs must withdraw inherited retirement accounts within 10 years.

The Superpower of Beneficiary Designations

A beneficiary designation is a simple form you complete with a bank, insurer, or investment company. It names who should receive a particular account or policy when you die. Because it acts as a direct transfer, the asset does not go through probate.

In Nebraska, you can use beneficiary designations on:

• Retirement accounts such as IRAs and 401(k)s

• Life insurance policies and annuities

• Bank accounts with Payable-on-Death (POD) instructions

• Investment and brokerage accounts with Transfer-on-Death (TOD) instructions

• Real estate through a Transfer on Death Deed (TODD), under the Nebraska Uniform Real Property Transfer on Death Act

When coordinated with your estate plan, these tools are efficient and private. But if ignored, they can create the very conflicts you’re trying to avoid.

When Beneficiary Forms Clash with Your Will

The most important rule in Nebraska: the beneficiary form wins.

For example, if your will says everything should be divided equally among your three children, but your oldest child is the sole named beneficiary on a large account, that account goes entirely to them. Your other children get nothing from it—no matter what your will says.

This is how outdated forms accidentally disinherit loved ones and spark family disputes.

The SECURE Act and Retirement Accounts

Retirement accounts are especially complex because of federal tax law. The SECURE Act of 2020 eliminated the “stretch IRA” for most non-spouse beneficiaries. Instead, they must withdraw the full balance within 10 years of inheriting the account.

This can create significant tax consequences, especially if withdrawals happen during peak earning years. Exceptions exist for “Eligible Designated Beneficiaries,” such as surviving spouses, minor children, and individuals with disabilities, but most beneficiaries face the 10-year rule.

If your retirement plan names a trust as beneficiary, the SECURE Act makes it vital to review the trust language. Many older “conduit trusts” no longer work effectively. Accumulation trusts are often a better fit under the new rules.

Best Practices for Nebraskans

Managing beneficiary designations well doesn’t have to be complicated. Here are key strategies:

• Audit your designations regularly. Confirm in writing who is listed as a beneficiary for each account or policy.

• Name both primary and contingent beneficiaries. This ensures your wishes are carried out even if a primary beneficiary dies first.

• Coordinate with your overall plan. Your designations should work together with your will and trust to create the outcome you want.

• Be cautious with minors. Naming a minor directly often triggers a court-supervised conservatorship. A trust or custodian is usually better.

• Review after every major life event. Marriage, divorce, births, and deaths are natural times to make updates.

Frequently Asked Questions

Do beneficiary designations override a will in Nebraska?

Yes. They are contracts with the financial institution and control who inherits the asset.

Can I name multiple beneficiaries?

Yes. Most forms allow you to assign percentages among multiple beneficiaries. Be precise to avoid confusion.

What happens if no beneficiary is named?

The asset will likely pass through probate and be distributed under your will or Nebraska’s intestacy laws.

Can I name my trust as beneficiary?

Yes, and it is often a good option for minors or beneficiaries needing financial oversight. But retirement accounts require careful drafting because of SECURE Act rules.

Do I need an attorney to update a form?

Not technically—you can request new forms from the financial institution. But legal advice ensures your designations don’t conflict with the rest of your plan.

Final Thoughts

Beneficiary designations are one of the most powerful tools in Nebraska estate planning. They can save time and money by avoiding probate, but they must be reviewed and coordinated with your will and trust. Outdated or inconsistent forms are one of the most common—and most preventable—estate planning mistakes. Taking the time to review them today ensures your legacy is passed on exactly the way you intend.