Asset Ownership in Florida: The Hidden Risks of Beneficiary Designations
Many financial accounts and investment assets allow you to name a beneficiary who will automatically receive ownership upon your death. These accounts are commonly called “Transfer on Death” (TOD) or “Payable on Death” (POD)” accounts.
Similarly, Florida real estate can pass outside of probate through tools such as a life estate deed with a remainder interest (authorized under Chapter 689, Florida Statutes).
Because these arrangements typically avoid probate, they are often viewed as simple and cost-effective Florida estate planning solutions. In many cases, the beneficiary only needs to present a certified death certificate to the financial institution or county recorder’s office to complete the transfer.
However, while beneficiary designations can be helpful, they are not without risks. Without careful coordination, they can unintentionally disrupt your estate plan.
Understanding How Beneficiary Designations Work in Florida
Under Florida law, assets with valid beneficiary designations pass directly to the named beneficiary, outside of probate. Importantly, these designations generally override the instructions in a Last Will and Testament.
This means your will does not control how those accounts are distributed—even if the will was signed later.
That distinction often surprises families and can create unintended consequences.
Risk #1: Unintentional Disinheritance
One of the most common problems is unintentional disinheritance, which occurs when beneficiary designations conflict with your will or trust.
A Common Scenario
Imagine John, a Florida resident with two children. For convenience, he names only one child as the beneficiary on several bank accounts. Later, he signs a will leaving all of his assets equally to both children.
When John passes away, the bank accounts go entirely to the one child listed as beneficiary. The will does not control those accounts. The financial institution is legally obligated to follow the beneficiary designation on file.
The result? One child unintentionally receives more than John intended.
This type of situation can lead to confusion, family disputes, and even litigation—despite the parent’s effort to create a fair estate plan.
Risk #2: A Living Trust Does Not Automatically Fix the Problem
Many people assume that creating a revocable living trust solves these issues. While trusts are powerful estate planning tools, they only work properly if assets are correctly aligned with the trust as part of a comprehensive wealth and estate planning strategy.
If you create a trust but:
Fail to retitle accounts into the trust
Fail to update beneficiary designations to name the trust where appropriate
the beneficiary designation will still control.
In other words, the account may pass directly to the named individual instead of being managed according to the trust’s instructions. This can defeat planning goals related to:
Asset protection
Structured distributions
Management for minor or financially inexperienced beneficiaries
Proper “funding” of a trust is just as important as drafting it.
Risk #3: Lack of Fiduciary Oversight
Another often-overlooked issue involves creditor claims and estate administration.
When assets pass through probate in Florida, a personal representative is responsible for:
Providing notice to creditors
Paying valid debts
Addressing taxes and expenses
Distributing remaining assets properly
(See Florida Probate Code, Chapters 731–735, Florida Statutes.)
By contrast, assets that pass by beneficiary designation have no built-in fiduciary oversight. The financial institution transfers the funds directly to the beneficiary.
However, this does not automatically eliminate creditor rights. Under certain circumstances, creditors may still pursue recovery, and a probate proceeding may be opened to address estate debts through the Florida probate and estate administration process. Beneficiaries who received funds could potentially face claims depending on the situation.
This is one reason beneficiary designations should be part of a coordinated estate plan—not a stand-alone solution.
Are Beneficiary Designations Ever Appropriate?
Yes—beneficiary designations can be very effective when used strategically.
They are often appropriate for:
Certain retirement accounts
Life insurance policies
Specific financial accounts intended for direct transfer
Coordinated trust-based planning
The key is ensuring they align with your broader estate planning goals under Florida law.
The Bottom Line: Coordination Is Essential
Avoiding probate can be beneficial—but probate avoidance alone should not drive your planning decisions.
Beneficiary designations must be carefully reviewed and coordinated with:
Your Last Will and Testament
Your Revocable Living Trust (if applicable)
Your overall asset protection strategy
Your intended distribution plan
Even small oversights—such as failing to update a beneficiary after a life event—can significantly alter how your assets are distributed.
A comprehensive estate plan considers how each asset is owned, titled, and designated so that everything works together seamlessly.
Contact Sosa Legal
If you have questions about beneficiary designations, TOD/POD accounts, trusts, or probate planning in Florida, Sosa Legal is here to help clients throughout South Florida and the surrounding communities.
Our team can review your current asset ownership structure and ensure your estate plan reflects your true intentions—clearly, efficiently, and in compliance with Florida law.
Contact Sosa Legal today to schedule a consultation and take the next step toward protecting your legacy.
Disclaimer
This article is for informational purposes only and does not constitute legal advice. Reading this content does not create an attorney-client relationship. Estate planning laws are complex and subject to change. You should consult with a qualified Florida attorney regarding your specific situation.
