Does an annuity go through probate?

Generally not, provided a living beneficiary is named on the contract. Because the annuity names a person directly, the value can usually pass to them without going through the probate process. If no beneficiary is named, or the named beneficiary has died, the value may end up in the estate and be subject to probate after all.

Can I name more than one beneficiary?

Yes. Most contracts allow multiple primary beneficiaries with a stated share each, and contingent beneficiaries who receive value only if a primary beneficiary has died. Naming contingents is one of the most commonly skipped steps and one of the easiest to fix.

Will my family owe tax on what they receive?

Usually some tax applies, and the amount depends on the type of contract and on what the beneficiary chooses to do. Growth inside a non-qualified annuity is generally taxable to the beneficiary when received, and a qualified annuity is generally taxable in full. This is an area where your family will benefit from professional advice at the time.

Does my will override the beneficiary form?

Generally no, and this surprises people. The beneficiary designation on the contract usually controls, regardless of what a will says. That is exactly why reviewing beneficiary forms periodically matters as much as reviewing the will itself.

Annuities

Annuities and Leaving a Legacy for Your Family

An annuity can pass value to the people you name, often without probate. What actually happens depends on choices made when the contract is set up.

Key Financial GroupSeptember 9, 2026

The short version: An annuity passes to the people named on the contract, usually without probate. Whether anything remains to pass on depends on the payment option chosen, and who receives it depends on a beneficiary form that many people fill in once and never revisit.

Two different questions

People asking about annuities and legacy are usually asking two things at once, and separating them helps.

The first is whether anything will be left. That depends on the payment option.

The second is who receives it and how smoothly. That depends on the beneficiary designation and on the contract's terms.

Both are within your control, and both are decided by paperwork rather than by luck.

Whether anything remains

A contract still accumulating

If the contract has not been annuitized, the position is straightforward. The value belongs to the contract, and on death it generally passes to the named beneficiary.

This is the most common situation among the people we work with, because many never annuitize at all. They take withdrawals when they want them and the remainder passes on.

A contract paying lifetime income

Once annuitized, the answer depends entirely on the option selected at the time.

A straight life option ends at death and nothing passes on. That option produces the largest payment precisely because it makes no promise beyond your lifetime.

A period certain option continues payments to a beneficiary for the remainder of a stated period. A joint and survivor option continues for a spouse's lifetime. Some contracts also offer a cash refund feature, which returns any unused portion of the original amount.

Each of these produces a smaller payment than straight life. That is the trade, and it is a legitimate one. Someone with no dependants and someone supporting a spouse are reasonably going to choose differently.

Who receives it, and why the form matters more than the will

Here is the part that catches families out.

The beneficiary designation on the contract generally controls who receives the value, and it generally overrides what a will says. A carefully drafted will does not fix an out of date beneficiary form.

We have seen forms naming a former spouse, forms naming someone who has since died with no contingent listed, and forms left blank because the paperwork was rushed. Each of those creates a problem that was entirely avoidable.

The habits worth adopting

Name a contingent beneficiary, not only a primary. If the primary has died first, the contingent receives it. Without one, the value may fall into the estate and be subject to probate.

Review after any major life event. Marriage, divorce, a death, a birth. These are the moments when a form written years ago becomes wrong.

Keep a written record of what you named and where. Your family will be grateful for a simple list of institutions and contacts, more than for almost any other document.

Check the spelling and the details. A beneficiary who cannot be identified with certainty creates delay at the worst possible moment.

Avoiding probate is a real practical benefit

Because a named beneficiary receives the value directly, that value can usually pass without going through probate. Probate is a public process, it takes time, and it can carry cost.

For families dealing with a death, receiving something without a lengthy administrative process has real value beyond the money itself.

This is one of the quiet advantages of contracts that name a person directly. It applies to annuities and it applies to life insurance for the same reason.

The tax picture, in outline

Beneficiaries generally do not receive annuity value entirely free of tax.

For a non-qualified contract, growth above the original contribution is generally taxable to the beneficiary when received. For a qualified contract funded with pre-tax money, distributions are generally taxable in full.

There are usually choices about how and when a beneficiary takes the value, and those choices affect the tax outcome. This is genuinely a case for professional advice at the time, and we say so to every family we work with. Our article on how tax deferral works covers the underlying mechanism.

Balancing legacy against your own security

A word of caution, offered gently.

We sometimes meet people so focused on leaving something behind that they underfund their own retirement. That is an understandable instinct and it can end badly, particularly if care costs arrive later.

The order that tends to serve families best is to secure your own essential expenses first, keep a genuine liquid reserve, and then consider what passes on. We work through the first of those in using an annuity to cover essential expenses.

Your family will almost always prefer that you were comfortable and secure. Leaving less because you lived well is not a failure of planning.

If you would like help reviewing beneficiary designations across your accounts, or thinking through payment options with your family in mind, schedule a free consultation. There is no obligation.

This article is for general education and is not financial, tax, or legal advice. Please speak with a licensed professional about your situation.