Many people remember to update their will after a divorce, remarriage, or other family changes—but overlook one critical point: reviewing and updating the beneficiaries listed on provident funds, pension plans, and life insurance policies. This common mistake can result in money you’ve accumulated over decades ending up in the wrong hands, contrary to your true intentions.
What Is a Beneficiary Designation and How Does It Differ from a Will?
A beneficiary designation is a direct instruction given to an insurance company or financial institution stating who should receive the funds from a particular account or policy upon your death. Unlike a will, these funds are not part of your estate and are therefore not subject to probate or inheritance proceedings. They are transferred directly to the named beneficiaries without court involvement.
Under Israel’s Inheritance Law (as of 2025), an estate is distributed according to the deceased’s will or, if there is no will, according to the statutory order of succession. However, Section 147 of the law makes clear that funds payable upon death under insurance policies, pension plans, or provident funds are not part of the estate. They belong to the person named as the beneficiary.
Does a Beneficiary Designation Override a Will?
In most cases, yes. Funds in provident funds or insurance policies are paid to the beneficiaries as stated in the designation given at the time of joining the plan (or later updates), regardless of what is written in the will—unless the will explicitly states otherwise and the financial institution has been notified in advance.
This means you could write in your will that all your assets should pass to your current spouse, but if you never changed the beneficiaries in your pension plan, the funds may instead go to your former spouse or someone you named years ago.
Why Is This Distinction Important?
Beyond the legal aspect, this difference has practical implications:
The beneficiary receives the funds directly from the financial institution—no need for court proceedings or an attorney.
The funds cannot be claimed as part of the estate in debt collection, alimony, or similar claims, since they are not part of the estate.
A will alone is not enough to change the beneficiaries; you must also update them with the relevant institutions.
How to Avoid Costly Mistakes
To prevent unpleasant surprises and ensure your money goes to the right people, follow these steps:
Check Who Your Current Beneficiaries Are
Review all life insurance policies, provident funds, study funds, and pension accounts. Contact the companies and request written confirmation of your beneficiaries. Don’t rely on memory—sometimes the default is “heirs under law,” which may not match your will.
Update Beneficiaries Proactively
After any major life change—divorce, marriage, birth, death—update your beneficiary designations. Even if many years have passed, confirm that your beneficiaries are still correct. The process is simple but critical; one small form can determine the fate of your funds.
Include a Clear Instruction in Your Will
If you want certain funds to be part of your estate and distributed according to your will, state this explicitly.
Notify Your Pension and Insurance Companies
A will alone is insufficient. Send a formal notice to your pension or insurance provider to cancel or change beneficiaries. This notice must be delivered while you are alive, preferably with a copy of the will, and you should keep proof of delivery and receipt.
Review Policy Terms
Check whether there are internal regulations or restrictions in the fund or policy rules.
Keep an Organized Record
Maintain a file containing all confirmations, notices, and relevant documents. Keep a digital copy in the cloud, and make sure at least one trusted family member knows where these documents are stored.
Seek Professional Legal Advice
This is especially important for complex family situations such as second marriages, children from different relationships, or multiple assets. An attorney specializing in wills and estates can help you avoid costly and exhausting disputes caused by poor drafting.
What If There’s Already a Conflict Between a Will and a Beneficiary Designation?
Correct both immediately. Courts often deal with these disputes, and the outcome is not always predictable. In some cases, beneficiary designations prevail; in others, a later will with a clear instruction may take precedence. Case law is evolving, so it’s better not to rely on interpretation—act in an orderly, explicit, and well-documented manner.
In Summary
Updating your will is only part of the picture. To ensure your money goes to the people you truly want to benefit, you must also review the designations on your accounts, policies, and savings. Align your beneficiaries with your will to ensure consistency. The process is simple, but the implications are significant.
Work with an attorney who specializes in wills and inheritance law. Poorly drafted documents can lead to long, costly legal battles.
There may also be issues you haven’t considered an experienced lawyer can help you address them and secure the best possible plan for your family’s future.
Our firm has over 60 years of expertise, across three generations, in inheritance law, wills, family wealth management, and careful future planning.
Contact us with any questions, we’ll help you protect what matters most.
