Once you have created the typical estate plan, your estate passes through two funnels.
Funnel A: the living trust funnel
Everything in the name of your living trust passes through this funnel and is governed by it. Once it goes through, it is distributed to whomever you designated in your living trust. This funnel holds regular bank accounts, investments, CDs, stocks, bonds and real estate.
Funnel B: the beneficiary funnel
Certain assets do not pass by way of the trust. They pass by way of a beneficiary. When you open accounts such as IRAs, 401(k)s and 403(b)s, or a life insurance policy, you write down a beneficiary, and that person gets the asset. It does not matter what you say in your trust. What you say on the beneficiary form governs. This funnel generally holds your tax-deferred accounts and life insurance.
In some cases you might want to make your living trust the beneficiary of certain assets. A lot of that depends on how much control you want to exert, and the age of your beneficiaries may also matter. There are a variety of reasons you might do it.
The goal
If you make sure all your assets pass one way or the other, the court system will not have to get involved and everything will run relatively smoothly.