I had a conversation with a new client recently that struck a chord. He was in his early 60s, organized, and his retirement savings were in good shape. As part of a routine review of his beneficiaries across his various accounts, while reviewing the designations for his 401(k) at the company he’d been with for 23 years, we noticed that his ex-wife was still listed as the primary beneficiary on his largest IRA. They had been divorced for eleven years.
He had no idea. Out of sight, out of mind.
This isn't an unusual story. It happens more than most people realize, and the consequences can be significant. A beneficiary designation overrides your will. It doesn't matter what your estate documents say. Whoever is listed on that form gets the money, full stop. That's why an annual beneficiary review isn't just a box to check. It's one of the most important conversations you can have with your financial advisor.
Life Has a Way of Moving Faster Than Your Paperwork
Life has a way of changing in ways we don't always stop to acknowledge. A marriage, a divorce, a new grandchild, or the loss of someone you expected to outlive you. Those aren't just personal milestones; they're moments that can change who you want to receive your assets. Family dynamics are rarely static, and the relationships that defined your life ten years ago may look very different today.
The problem is that beneficiary forms don't know any of that. Most people fill them out once, usually when they're opening a new account or starting a job, and then they move on to more pressing things. That's completely understandable. But years become decades, and those old designations just sit there, unchanged, until the moment they actually matter.
For families here in Iowa who have spent a lifetime working hard and building something worth passing on, an outdated form can quietly undermine your plan. Your intentions were clear when you filled that form out. The question is whether they still match what's on file today.
Your Will Doesn't Have the Final Word
This surprises a lot of people. You might have a carefully prepared will that outlines exactly how you want your assets distributed. Your attorney drafted it, you signed it, and it's sitting in a safe place. That's great. But beneficiary designations on retirement accounts, life insurance policies, and annuities operate outside of your will.
If those designations conflict with your estate plan, the designation wins.
An annual review gives you the chance to make sure everything is working together. Sometimes we discover that a trust needs to be created or updated. Sometimes a will hasn't been revisited since the kids were young. The beneficiary review often opens the door to those broader conversations, and that's exactly the point. It's not just about the form. It's about making sure your entire financial picture is aligned with what you actually want.
Who You Name Matters More Than You Might Think
There's another layer to this that doesn't get enough attention: the tax implications of your beneficiary choices.
Naming a spouse as beneficiary carries different rules than naming an adult child, a trust, or a charitable organization. The wrong designation, even with the best intentions, can create a meaningful and unnecessary tax burden for the people you're trying to take care of.
A simple example. Leaving a traditional IRA to a non-spouse beneficiary means they'll need to withdraw the funds within ten years, and those withdrawals are taxable income. Depending on the size of the account and their own income, that inheritance could push them into a higher tax bracket. There are strategies to manage this, but they require planning. The annual review is where that planning starts.
The Good News: This Is One of the Easiest Things You Can Do
Updating a beneficiary designation is nothing like updating a will or a trust. Those documents often require an attorney, formal drafting, witnesses, and filing fees. They take time and coordination to get right.
Updating a beneficiary? In most cases, you log into your account, fill out a form, and you're done. No lawyers, no notary, no specialized services. It's one of the rare situations in financial planning where the fix is genuinely straightforward. The hard part isn't making the change. It's knowing the change needs to be made. That's exactly what the annual review is designed to catch.
Protecting the People You Love Most
At its core, this is what the annual beneficiary review is really about. Not paperwork. Not compliance. Not checking a box on a to-do list.
It's about making sure that when something happens to you, the people you love aren't left sorting through confusion, conflict, or unintended consequences during an already difficult time. Here in the Midwest, taking care of your family is a value that runs deep. The beneficiary review is one of the most practical ways to honor that.
Think about the alternative. An outdated form. A family member who expected to be included and wasn't. A former spouse who receives assets you never intended for them. Legal challenges that drag on for months. These situations are more common than most families expect, and they're often preventable.
Protecting Your Family’s Future
After years of working with Iowa families on retirement planning, I can tell you that the clients who feel most confident aren't always the ones with the largest portfolios. They're the ones who know their plan is complete. They've done the work. Their accounts reflect their wishes. Their family won't be left guessing.
That's what the annual beneficiary review provides. Its not exciting, nor a dramatic strategy shift. Just the quiet confidence that comes from knowing everything is in order.
At RetireRight, we make the beneficiary review a standard part of our annual planning conversations. It takes less time than you'd expect and it consistently surfaces things worth addressing. If it's been more than a year since you've looked at your designations, or if you've never reviewed them at all, let's have that conversation.
It's one of the simplest things you can do to protect everything you've worked so hard to build.
Frequently Asked Questions About Beneficiary Reviews
How often should I review my beneficiary designations? Once a year is a good rule of thumb, and it pairs naturally with your annual financial review. That said, any major life event, a marriage, divorce, birth of a grandchild, or death of a loved one, is a reason to do an immediate review without waiting for the calendar to turn.
Does my will automatically update my beneficiary designations? No, and this is one of the most common misconceptions we encounter. Your will and your beneficiary designations are completely separate. The designation on file with your financial institution controls who receives that asset, regardless of what your will says. Keeping both documents aligned is essential.
What accounts have beneficiary designations? Most retirement accounts carry them, including IRAs, 401(k)s, and 403(b)s. Life insurance policies, annuities, and certain bank or investment accounts with transfer-on-death designations do as well. If you're unsure which of your accounts have designations on file, your advisor can help you pull a complete picture.
Can I name a minor child as a beneficiary? You can, but it comes with complications. Minor children cannot legally receive a large inheritance directly. A court will typically appoint a guardian to manage those assets until the child reaches adulthood, which can be a lengthy and expensive process. Naming a trust as beneficiary, with the child as the trust beneficiary, is often a cleaner solution.
What happens if I don't name a beneficiary at all? The asset typically passes through your estate, which means it goes through probate. Probate can be time-consuming, costly, and public. In most cases, naming a beneficiary directly is a simpler and faster way to transfer assets to the people you intend.
Is a beneficiary review the same as updating my will? They're related but separate. Your will covers assets that pass through your estate. Beneficiary designations cover accounts and policies that transfer directly to the named individual. A thorough estate plan addresses both, and your annual review is a good opportunity to make sure they're working together.
When was the last time you reviewed your beneficiaries? If you can't remember, that's reason enough to act. Reach out today to schedule a complimentary beneficiary review with one of our RetireRight advisors.