Will Beneficiary vs. CD Beneficiary: Which Wins?

Investing in certificates of deposit (CD) is a powerful wealth-building strategy. CDs are safe since most are insured by the FDIC, and although their returns are not spectacular, they’re still decent enough to be an attractive investment for those who don’t want to take on a lot of risk. Many people will often name a beneficiary to their CDs using the payable on death option: a spouse or partner, family member or relative, or even a charity that is dear to their heart. There can be a conflict however, when the deceased has a separate will that allocates all assets to a different beneficiary.

True CD Beneficiary

When someone names a beneficiary for their CD and dies with a will that stipulates all assets of the deceased are to be shared in a certain way that conflicts with the designation of the CD beneficiary, the question who will receive the CD often arises? The answer to this question is that the CD beneficiary is the recipient of the CD, regardless of what is stated in the will. (Note: If you’ve recently received a CD in the death of a loved one, we’ve compiled some tips for CD beneficiaries).

Resolving the Beneficiary Conflict

If you find yourself in a situation where there is a conflict between someone’s will and your status as the beneficiary of a CD, you can rest assured that the CD will be remanded to you. A CD is considered a non-probate asset, and so it won’t be included in the settlement of the estate. In a sense, the fact that you have been named beneficiary of the CD will trump any indication in a will that it be given to anyone else.

To learn more about CD beneficiaries, CDs, wills, and other questions regarding your money, be sure to meet with a financial advisor. He or she will explain to you everything you need to know about certificates of deposit and other financial products.