TURN TO A FIRM WHERE YOU'RE TREATED LIKE FAMILY TURN TO ATKINSON LAW

The Annual Beneficiary Checkup: How “Non-Probate” Assets Can Undermine Your Maryland Estate Plan

Feb. 25, 2026

Most people think their will controls where their money goes when they die.  In Maryland, that assumption can be dangerously wrong.

A large portion of your assets may pass outside of probate, and outside of your will, based solely on beneficiary designations sitting on file with banks, insurance companies, and retirement plan administrators.  If those designations are outdated, incomplete, or missing altogether, the results can range from frustrating delays to money going to the wrong people…or even ending up with the State of Maryland.

That’s why one of the most overlooked (and most important) estate planning habits is the annual beneficiary review.

* * * * * * * * * * * * * * * * * * * * * * * *

A. Probate vs. “Non-Probate” Assets in Maryland

In Maryland, probate assets are those owned solely in your name with no built-in transfer mechanism.  These assets pass through the Orphans’ Court under the supervision of a personal representative.

Non-probate assets, on the other hand, transfer automatically at death by operation of law or contract.  Common examples include:

  • Life insurance policies

  • Retirement accounts (IRAs, 401(k)s, 403(b)s)

  • Annuities

  • Payable-on-death (POD) bank accounts

  • Transfer-on-death (TOD) brokerage accounts

Maryland law recognizes that assets with valid beneficiary designations pass outside of the estate, regardless of what a will says (see Md. Code, Estates & Trusts § 9-201 (2024)).

Key takeaway:
If your will says “everything goes to my children,” but your life insurance names your ex-spouse, the insurance company will follow the beneficiary form, not your will.

 

 

B. Why Beneficiary Designations Are So Often Wrong

Beneficiary forms are deceptively simple, and that’s part of the problem.  They’re usually completed quickly when an account is opened and then forgotten for decades.

Some common reasons beneficiary designations are outdated or ineffective include:

  • Marriage, divorce, or remarriage,

  • Birth or adoption of children or grandchildren,

  • Death of a named beneficiary,

  • Estranged family relationships,

  • Creation of a trust after accounts were opened, and/or

  • Employer retirement plans opened long before an estate plan existed.

Because these assets bypass probate, the Orphans’ Court has no authority to “fix” a bad beneficiary designation, even if the outcome is clearly inconsistent with the decedent’s intent.

C. Why an Annual Review Matters (Even If Nothing Has Changed)

An annual review isn’t about assuming something has changed, it’s about confirming nothing has. Use this resource on our website as a guideline for this review.

Financial institutions rely on:

  • Exact legal names

  • Current addresses

  • Clear primary and contingent beneficiary designations

If a beneficiary cannot be identified or located based on the information on file, the institution may be unable to distribute the funds promptly—or at all.

That’s when non-probate assets can unexpectedly boomerang back into the estate and create probate delays your planning was supposed to avoid.

D. What Happens in Maryland If Beneficiaries Are Unknown or Can’t Be Found?

1. Bank Accounts with POD or Multiple-Party Designations

Under Maryland’s Financial Institutions Article § 1-204 (2024), if no beneficiary survives or can be paid, the funds may become payable to the personal representative of the estate.

That means:

  • A probate estate may need to be opened

  • Creditors may have access to the funds

  • Distribution is delayed until probate concludes

2. Life Insurance and Annuities

If life insurance proceeds are payable but remain unclaimed for more than three years, Maryland’s abandoned property laws apply (Commercial Law § 17-302 (2024).

At that point:

  • The funds are turned over to the Maryland Comptroller

  • Beneficiaries must later locate and claim the money

  • The process becomes administrative and document-heavy

Families often assume insurance “just pays out.”  In reality, missing or vague beneficiary information can derail that assumption entirely.

3. Retirement Accounts

Retirement accounts with no valid beneficiary designation often default to the estate, triggering:

  • Probate involvement

  • Loss of potential tax-favored “stretch” options

  • Additional administrative costs

E. Where Maryland Families End Up Looking for “Missing” Assets

When beneficiaries don’t know where to turn, common recovery paths include:

  • Maryland Insurance Administration resources for locating life insurance policies

  • The Maryland Comptroller’s Unclaimed Property Division, which holds abandoned insurance proceeds, bank funds, and other financial assets

These tools are helpful—but they’re a last resort, not a plan.

F. The Bottom Line

Estate planning in Maryland isn’t just about drafting documents—it’s about maintaining alignment.

An outdated beneficiary form can undo careful planning, force assets into probate, delay distributions, or send money into Maryland’s unclaimed property system.  A simple annual checkup can prevent all of that.

If your goal is to make things easier for the people you love, this is one habit that pays off every single time.

At Atkinson Law, we listen to all our clients and protect their interests so they can receive a positive legal outcome.  We’ll work with you and give you the best possible recommendation for your future.  To learn more about Estate Planning, contact us today by calling (410) 882-9595 or visiting our website.