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Why You Must Review Your Beneficiary Designations


Many people believe their estate plan is complete once they sign a will or trust. They leave their attorney’s office with confidence, thinking everything is set for the future.


Unfortunately, that assumption can lead to one of the most overlooked and costly estate planning mistakes: failing to review beneficiary designations.


Beneficiary designations control who receives many of your most valuable accounts. If those designations are outdated, missing, or incorrectly assigned, they can override your will or trust. The result can be lost assets, probate, family conflict, and an estate plan that fails to achieve your goals.


This article explains what beneficiary designations are, why they matter so much, and how to make sure your estate plan works the way you intended.



What Is a Beneficiary Designation


A beneficiary designation is a legally binding instruction attached to a financial account or insurance policy. It tells the institution who should receive the account when you pass away.


These designations are most commonly found on:

  • Retirement accounts such as 401(k) plans and individual retirement accounts

  • Life insurance policies

  • Annuities

  • Bank accounts with payable on death instructions

  • Investment accounts with transfer on death instructions

  • Health savings accounts

  • College savings plans


When a beneficiary is named on one of these accounts, the funds are distributed directly to that person, without going through your will, your trust, or probate.


This is why reviewing these designations is essential. Even if your estate plan says one thing, the beneficiary form takes legal priority.



Why Beneficiary Designations Override Your Estate Plan


One of the most common myths in estate planning is that a will or trust controls all your assets. In reality, many of your most significant accounts are not governed by those documents. Instead, they are governed by the beneficiary designations on file with each financial institution.


If those designations are not reviewed and updated regularly, you could unintentionally disinherit loved ones or pass assets to the wrong people.


For example:

  • A former spouse could still be named as the beneficiary on your retirement account

  • A deceased beneficiary could leave the account without instructions, sending it into probate

  • One child could be listed while others are left out

  • A trust you created may be bypassed entirely


A single outdated beneficiary form can completely undo your estate plan.



Life Changes That Should Trigger a Beneficiary Designations Review


Estate planning is not something you do once and forget. Life changes, and your plan needs to reflect those changes.


You should review and update your beneficiary designations after any of the following:

  • Marriage or remarriage

  • Divorce or legal separation

  • Birth or adoption of a child or grandchild

  • Death of a spouse, child, or other listed beneficiary

  • Change in employment or retirement plan provider

  • Creation or update of a trust

  • Any significant financial change


Even positive life events can have unintended consequences if your designations are not updated.



Why You Should Review Designations Every Year


Even if you have not experienced any major life events, it is still important to review your beneficiary designations annually.


Institutions occasionally update systems or transition to new providers. In these situations, beneficiary designations can be cleared or lost without your knowledge.


Annual reviews help ensure that:

  • Your beneficiaries are still alive

  • Your wishes are still current

  • Primary and contingent beneficiaries are both listed

  • Your designations are coordinated with your estate plan


These quick checks can prevent years of complications for your family.



Accounts That Need Annual Beneficiary Review

Here is a checklist of accounts you should review each year to confirm that beneficiary information is correct:


Retirement Accounts

  • 401(k) plans

  • Traditional individual retirement accounts

  • Roth individual retirement accounts

  • SEP and SIMPLE plans

  • Pensions


Life Insurance Policies

  • Group policies through work

  • Private life insurance

  • Term and whole life policies


Financial Accounts

  • Investment and brokerage accounts with transfer on death instructions

  • Annuities with named beneficiaries

  • Bank accounts with payable on death instructions

  • Certificates of deposit

  • Health savings accounts

  • College savings plans


For each account, ensure you have:

  • A clearly listed primary beneficiary

  • A contingent or secondary beneficiary

  • Accurate spelling, percentages, and legal names

  • Instructions that align with your overall estate plan



The Risk of Not Updating Beneficiaries


The consequences of outdated or missing beneficiary designations can be severe.


  • Accounts may go through probate, adding court involvement, cost, and delays

  • Assets may pass to unintended individuals

  • Legal disputes can arise between family members

  • Your wishes may be ignored due to technical errors


In Pennsylvania, probate can be avoided for many assets when proper planning is in place. However, a wrong or missing designation can undo that planning.


The best protection is prevention. Keeping your plan up to date will save your family unnecessary stress and ensure that your legacy is honored.



How Beneficiary Designations Fit Into Your Estate Plan


Beneficiary designations are just one piece of your overall estate plan, but they must be coordinated with everything else.


For example, you may want to name a trust as the beneficiary of a retirement account in order to provide ongoing support for a child or protect government benefits for a loved one with special needs.


In other cases, naming individuals directly may be appropriate. Every family’s needs are different, which is why working with a knowledgeable estate planning attorney is so important.



How Entrusted Legacy Law Supports This Process


At Entrusted Legacy Law, we understand that estate planning is about more than documents. It is about protecting your family and making sure your wishes are honored.


We guide you through the full estate planning process, including identifying all your accounts with beneficiary designations and helping you ensure they align with your plan.


Our annual membership and maintenance programs are designed to keep your plan updated as life evolves, so nothing is left to chance.


We are not a traditional law firm. We do not wear suits or send surprise bills. We focus on long term relationships with our clients because your family deserves that kind of support.



Next Steps to Protect Your Legacy


Here is what you can do today:


  1. Make a list of all accounts that have or may need a beneficiary designation

  2. Log in or contact your financial providers to review each account

  3. Confirm that beneficiaries are listed, up to date, and reflect your current wishes

  4. Make sure both primary and contingent beneficiaries are included

  5. Consult an estate planning attorney if you are unsure how your designations interact with your will or trust


Taking action now ensures your legacy is protected and your loved ones are not left with complications later.



Schedule a Consultation


Entrusted Legacy Law proudly serves families throughout Pennsylvania with heart centered, education based estate planning. Our goal is to help you create a plan that works today and tomorrow. If you are ready to review your beneficiary designations or build a comprehensive estate plan, we invite you to schedule a consultation.


 
 
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