Why updating beneficiary designations matters

Beneficiary designations are among the most powerful—and most overlooked—components of an estate plan. When you name a beneficiary on a life insurance policy, IRA, 401(k), or payable-on-death bank account, those contract terms typically control who receives the funds when you die. That can let assets bypass probate, which is efficient, but it also means outdated designations can produce results you didn’t intend (for example, an ex-spouse or an estate receiving funds instead of your children).

In my practice over 15 years advising clients, I’ve seen small oversights create large financial and emotional problems after death. The checklist below reduces those risks by walking you through what to look for, how to make changes, and what documentation to keep.

Quick checklist (at-a-glance)

1. Make a complete account inventory (insurance, retirement, bank, investment, annuities, HSA).
2. Review each beneficiary field (primary and contingent).
3. Update legal names and birthdates; add trusts if needed.
4. Obtain and save confirmation from providers.
5. Note special rules (divorce, community-property states, employer plans).
6. Revisit annually and after every major life event.

Step-by-step process to update beneficiaries

1) Create a master list of accounts

• Include life insurance policies, term and permanent.
• Employer retirement plans (401(k), 403(b), 457(b)).
• Individual retirement accounts (IRAs, Roth IRAs).
• Bank accounts with payable-on-death (POD) or transfer-on-death (TOD) designations.
• Investment accounts with TOD designations.
• Annuities and pensions.
• Health savings accounts (HSAs) and brokerage accounts.

Tip: Search old emails and safe deposit boxes for paper policy numbers. Don’t forget employer plans from former jobs.

2) Check the actual beneficiary fields—not just your will

Wills and trusts are important, but beneficiary designations on contracts usually override the will for those specific assets. Confirm each provider’s beneficiary screen or form rather than relying on memory or a will alone (Consumer Financial Protection Bureau guidance recommends checking account contract terms regularly: https://www.consumerfinance.gov).

3) Know the difference between primary and contingent beneficiaries

• Primary beneficiary: First in line to receive the asset.
• Contingent (secondary) beneficiary: Receives the asset if the primary predeceases you or cannot accept it.

Always name a contingent beneficiary. If none exists and the primary is deceased, funds may default to your estate and face probate.

4) Use exact legal names and consider birthdates or SSNs when allowed

Ambiguity creates delays. Use a beneficiary’s full legal name and, when the form allows it, a date of birth or Social Security number. For minor children, consider naming a trust (sample language below) rather than a minor directly.

5) Decide if you should name a trust, charity, or individual

• Trusts: Useful when you want control over timing or conditions (minors, special needs).
• Charities: If leaving funds to a nonprofit, name the organization directly and confirm its legal name and EIN.
• Individual: Easier for straightforward transfers but less control.

You can also name a trust as a beneficiary of an IRA or life policy; check tax consequences and trust drafting needs with an attorney.

6) Handle divorce, remarriage, and death of a beneficiary carefully

• Divorce: Some states automatically revoke spousal beneficiary designations, but not all do. After divorce, update beneficiary fields immediately (and keep copies of the change confirmation).
• Remarriage: If you want a new spouse to be a beneficiary, update accounts and check estate agreements (pre- or post-nuptial terms).
• Death of a beneficiary: Replace the deceased, and check contingent designations for the order of succession.

7) Employer plans and beneficiary forms

Employer retirement plans often require their own form and may limit who you can name for pre-retirement death benefits (e.g., a spouse may have consent rights). Always use the plan’s beneficiary form and obtain confirmation from HR.

8) Save confirmations and create a locate file for survivors

Keep PDFs, screenshots, or printouts of signed beneficiary forms and confirmation emails. Provide trusted executors or family members with instructions to find these documents (but do not include sensitive passwords in unsecured locations).

Sample beneficiary designation language

• Individual: “Jane A. Smith, DOB 01/01/1980, SSN XXX-XX-1234.”
• Trust: “The Jane A. Smith Revocable Trust dated March 15, 2025, Tax ID (if applicable), Trustee: John B. Smith.”
• Contingent: “If primary beneficiary is unavailable, pay to Mary J. Doe, DOB 02/02/1985.”

(Always tailor the language to the provider’s form. Some forms provide dropdowns or specific fields for trust names.)

Account-specific notes

• Life insurance: Policies typically transfer outside probate. Confirm beneficiary changes with the insurer and request written confirmation.
• IRAs and 401(k)s: Retirement accounts can have tax and stretch rules for beneficiaries; naming a trust can complicate RMD rules—consult a tax adviser or the IRS guidance: https://www.irs.gov.
• Bank accounts (POD/TOD): These are state-law governed in many cases; confirm how your state treats payable-on-death and whether TOD registrations are permitted.
• 529 plans: These often allow beneficiary changes with specific rules—see our guide on 529 plan beneficiary changes for details: 529 Plan Beneficiary Management: When and How to Change Names.

Common pitfalls and how to avoid them

• Relying only on a will: Beneficiary designations usually supersede wills for designated accounts. That’s why checking contract fields matters.
• Forgetting old accounts: Closed or forgotten accounts at previous employers can still hold balances—search and contact former plan administrators.
• Naming minors directly: If a minor inherits directly, many states require a court-appointed guardian or conservatorship; consider naming a trust instead.
• Using informal language: Avoid vague phrases like “to my children.” Name individuals or a trust.

Tax and legal considerations (high level)

Designating beneficiaries can have tax consequences, particularly for retirement accounts and annuities. Non-spouse beneficiaries face distribution and income tax rules that differ from spouses. The IRS has detailed guidance on retirement distributions and beneficiary treatment—consult the IRS site and a tax professional (https://www.irs.gov).

When to talk to a professional

• You have complex family dynamics (second marriages, blended families).
• You are naming a trust as beneficiary.
• You have a large retirement account with potential RMD complications.
• You are moving across states or live in a community-property jurisdiction—see our article on cross-state estate issues: Cross-State Estate Issues: When Moving Changes Your Plan.

In my advisory work, I routinely coordinate beneficiary updates with estate attorneys and plan administrators to make sure changes are legally effective and documented.

Practical review schedule

• Do a full beneficiary review at least once a year.
• Re-check beneficiaries immediately after major life events: marriage, divorce, birth/adoption, death of a beneficiary, retirement, or a substantial change in assets.

What survivors will need after your death

Provide the executor or a trusted family member with a checklist and locations for these items: policy numbers, account numbers, copies of beneficiary forms, and the contact information for plan administrators. Having confirmations available speeds claims and reduces family stress.

Final checklist (printable)

Professional disclaimer

This article is educational and does not replace personalized legal, tax, or financial advice. Laws and plan rules vary by state and provider. Consult a qualified estate planning attorney or tax professional before making decisions that affect your estate or tax situation (see guidance from the CFPB: https://www.consumerfinance.gov and the IRS: https://www.irs.gov).

Internal resources

• For the general concept of beneficiary paperwork, see our glossary entry: Beneficiary Designation.
• For naming alternates, see: Contingent Beneficiary.

Keeping beneficiary designations current is one of the most effective, low-cost estate-planning tasks you can do. Use this checklist after life changes to protect your wishes and reduce family stress.