One Simple Oversight Could Derail Your Entire Estate Plan
You may think your will or trust controls everything you leave behind—but when it comes to retirement accounts, life insurance policies, and certain investment accounts, that’s not the case. These assets pass directly to the named beneficiaries on your account documents—regardless of what your will says.
And yet, one of the most common (and costly) retirement planning mistakes is failing to review or update beneficiary forms. The result? Assets can end up in the wrong hands, go through probate, or trigger unintended taxes for your loved ones.
Why Beneficiary Designations Matter More Than You Think
Beneficiary forms legally override your will. That means if your will says one thing and your account paperwork says another—the form wins.
This small piece of paperwork can determine:
- Who inherits your IRA, 401(k), Roth IRA, annuity, or life insurance
- How quickly beneficiaries must withdraw assets (and pay taxes)
- Whether your estate must go through probate
- How your legacy is taxed and distributed
The worst part? Many people forget to update these forms after major life events—or never filled them out to begin with.
Real-World Mistakes That Cost Families Thousands
It happens more often than you’d think:
- A man forgets to remove his ex-wife as the beneficiary of his 401(k)—she gets the money instead of his children.
- A woman names her estate as the IRA beneficiary—now the funds must go through probate and trigger an accelerated tax bill.
- A couple leaves one child off the form entirely, unintentionally creating family conflict.
These are preventable problems with real financial consequences—and they often can’t be undone once the account holder has passed.
How to Get Your Beneficiary Forms Right
✅ Name Primary and Contingent Beneficiaries
Your primary beneficiary gets the assets first. A contingent (or secondary) beneficiary receives them if the primary is deceased. This adds a layer of protection.
✅ Review Forms After Major Life Events
Marriage, divorce, births, deaths, or family estrangement—any of these should trigger a beneficiary review.
✅ Avoid Naming Your Estate as Beneficiary
This can force the asset through probate and create tax complications. Instead, name individuals or a properly structured trust.
✅ Work With an Advisor to Align With Your Estate Plan
Your beneficiary forms should coordinate with your trust or will, especially if you have minor children, special needs dependents, or complex family dynamics.
A Simple Review Can Save Your Family Years of Headaches
At Heritage Financial Planning, our HFP S.T.A.R. Strategy (Seasonal Transition into Advanced Retirement) includes a full beneficiary review as part of your broader legacy plan. We help ensure your accounts, estate documents, and tax strategy all work together—so nothing falls through the cracks.
Don’t let a form decide your legacy. Schedule your beneficiary review with us today and gain peace of mind that your wishes will be honored.
Click here to learn more about our HFP STAR Strategy process.
Sources:
- IRS: Retirement Account Beneficiary Rules – https://www.irs.gov
- AARP: Why Beneficiary Forms Matter – https://www.aarp.org
- Fidelity: Estate Planning Tips – https://www.fidelity.com
- Heritage Financial Planning: https://heritagefinancialplanning.net/about/heritage-financial-star-strategy/
