Most people assume their will or trust controls how all their assets are distributed—but that’s not always true.
Accounts with beneficiary, transfer-on-death (TOD), or payable-on-death (POD) designations actually override what’s written in your estate plan. That includes retirement accounts, bank accounts, life insurance, and even real estate in some states.
If your beneficiary designations are out of date, missing, or incorrect, they can derail your entire plan—no matter how thorough your will or trust may be.
Common Mistakes (That Are Easy to Fix)
According to financial advisors, the most common—and costly—estate planning mistakes often involve beneficiary forms. These include:
- Failing to name a beneficiary at all
- Not updating designations after marriage, divorce, or births
- Naming a minor (who legally can’t inherit without a court-appointed guardian)
- Leaving out a contingent (backup) beneficiary
- Listing someone who is now incapacitated or receiving government benefits
- Assuming your trust or will overrides the designation—it doesn’t
These mistakes can cause delays, disputes, extra court involvement, or even result in your assets going to someone you no longer intended to receive them.
Real-World Examples
- Divorced but never updated? Your ex could legally receive your retirement funds.
- Forgot to change your life insurance? Your adult children might get nothing.
- No contingent beneficiary named? Your estate may need to go through probate anyway.
What You Can Do Now
The best practice is to review your beneficiary designations every few years—or anytime you experience a major life event.
Here are a few simple steps to take:
- Request confirmation from each financial institution of who they have listed as your beneficiary (don’t rely on your own records).
- Double-check for typos or outdated info (e.g., wrong name, incorrect relationship).
- Add contingent beneficiaries in case your primary beneficiary is unavailable.
- Consider naming a trust if your beneficiaries are minors, have special needs, or need oversight.
Need Help? We’ve Got You.
Your estate plan is only as strong as its details—and beneficiary designations are one of the most important. If you’re not sure whether your designations align with your wishes, we’re happy to help review them with you.
Protect your plan, protect your people. It all starts with a conversation. Call us at 714-451-5766.
