Can Beneficiary Designation on Mutual Fund Avoid Will and Disclosure to Other Heirs?
If I want to leave someone money from my mutual funds, does that have to be in my will or can I just make that person a beneficiary of that fund or partial beneficiary? Will that be known to other beneficiaries in the will?
Yes, assuming the investment company where you have your mutual funds allows you to do so, you can name someone as their beneficiary. These are often called TOD or transfer on death accounts. This would avoid probate and avoid coming under your will. Technically, your next of kin and the beneficiaries under your will have no reason or right to know about the funds, but in practice they might. Such disclosure would be more likely to occur if only part of the account were going to the named beneficiary, since the balance of the account would be disclosed. Certainly the personal representative under your will is likely to learn about them because she’ll see the tax records when she prepares your final income tax return.