When it comes to financial planning, most people focus on saving, investing, and reducing debt. But one often-overlooked detail can have a major impact on your generational wealth: beneficiary designations. Whether it’s a retirement account, life insurance policy, or bank account, these designations dictate who receives your assets when you pass away—sometimes regardless of what your will says.
And that’s exactly why you need to review them periodically.
Wills Don’t Override Beneficiary Forms
Many people assume their will controls everything, but that’s not the case. Beneficiary designations on accounts like IRAs, 401(k)s, and life insurance policies are legally binding. If they don’t align with your will, the designation on file takes precedence. That can lead to unexpected—and sometimes painful—surprises for surviving loved ones.
Avoid Probate and Legal Conflicts
Assets with named beneficiaries typically bypass probate, meaning they transfer directly to the designated individual. That’s a good thing—but only if the designations are accurate. Outdated or incorrect forms can create confusion, legal disputes, and delays that add stress during an already difficult time.
Life Changes, and So Should Your Beneficiaries
Marriage, divorce, births, deaths, changes in your relationships, and even changes in your children’s relationships can all affect who you want to inherit your assets. For example, if you named a spouse as your beneficiary and later divorced, forgetting to update that designation could mean they still receive your funds—despite your current wishes. Similarly, if you welcomed a new child or grandchild, they might be unintentionally left out.
That’s why we recommend reviewing your beneficiary designations at least once every two to three years, or whenever there’s a major life event. Check all relevant accounts—retirement plans, life insurance policies, bank and brokerage accounts—and confirm not only that the right people are listed, but also that their contact information is current.
Your beneficiary designations are a small step that offers significant peace of mind— by reviewing them regularly you could save your loved ones from many headaches and lots of legal fees down the road.