Beneficiary Designation Audit

Here’s a fact that catches people cold: your will does not control your retirement accounts or life insurance. The beneficiary form does, and it overrides whatever your will says. I’ve seen a stale designation send a seven-figure 401(k) to an ex-spouse while the current family got nothing, exactly the opposite of what the will laid out. The form wins, every time.

A beneficiary form filled out years ago and never revisited is one of the most common, and most expensive, mistakes in estate planning. The good news: an audit takes an afternoon and costs nothing. Walk this list once a year and after any big life event.

Pull every account that has a beneficiary form

• 401(k), 403(b), and other workplace retirement plans, current and old.
• Traditional, Roth, SEP, and SIMPLE IRAs.
• Life insurance policies, including any group coverage through work.
• Annuities.
• Health savings accounts (HSAs).
• Pensions and deferred compensation plans.
• Bank and brokerage accounts with a payable-on-death or transfer-on-death designation.

Check the primary beneficiary on each

• Confirm the name is who you actually want today, not a former spouse, an estranged relative, or someone no longer living.
• Make sure the person is still alive and the relationship still reflects your wishes.
• Verify the spelling and details are correct so there’s no dispute about who’s meant.

Don’t skip the contingent beneficiary

• Name a backup (contingent) beneficiary on every account. If your primary has died and there’s no contingent, the asset can default to your estate and land in probate, the slow, public, sometimes costly court process you were trying to avoid.
• Confirm the contingents still make sense too.

Watch the traps that quietly break a plan

• Naming a minor directly. A child can’t legally receive a large account, so the court appoints someone to manage it, on its terms, not yours. Route it through a trust or a custodian instead.
• Naming a disabled loved one directly. This can wipe out means-tested benefits. Name a special needs trust, not the person.
• Naming “my estate.” This usually forces the asset through probate and can accelerate income tax on inherited retirement accounts. Name people or trusts, not the estate.
• Conflicts with your will or trust. Remember the form wins. Make sure your designations and your estate plan tell the same story.

Coordinate the bigger picture

• Confirm beneficiary choices line up with your step-up basis vs. gifting strategy and any multigenerational Roth plan, since a Roth is often the asset you most want flowing cleanly to heirs.
• Tell your spouse or executor where these accounts are and who’s named.

Set a trigger to do it again

• Re-audit after any marriage, divorce, birth, death, or major account change. These are exactly the moments stale forms cause the most damage.
• Even with no life events, run the full list once a year.

Your will gets all the attention. The beneficiary forms do half the actual work, and they do it silently. Spend the afternoon. It’s the cheapest insurance in your entire estate plan.