I guess it's sort of like Transfer on Death (TOD) accounts, which receive special treatment in estate law. In a contested inheritance people can still make clai

I guess it's sort of like Transfer on Death (TOD) accounts, which receive special treatment in estate law. In a contested inheritance people can still make claims to TOD assets, but because they automatically transfer to a particular recipient upon notice of death it changes the facts on the ground, both from a legal posture but also just as a practical matter. For example, a bird in the hand is better than two in the bush--the receiver of TOD assets may be willing to walk away with less than they might be able to claim simply to avoid litigation. It also makes things easier and cheaper for the fiduciary (e.g. bank, insurer, etc) because they don't have to be mired in any litigation. They transfer the assets to the TOD beneficiary as a matter of course and nobody can challenge it; if you don't like it you sue the nominal beneficiary.