What Are 5 Mistakes Families Make with Beneficiary Designations?

Beneficiary designations control many major assets, including retirement accounts, bank accounts, and life insurance policies. Because these assets pass outside of a will or trust, even small errors can override an entire estate plan. Unfortunately, beneficiary forms are often treated as an afterthought. That is where problems begin.

Mistake 1: Outdated beneficiaries

Life changes quickly. Marriage, divorce, remarriage, births, deaths, and blended families all affect who someone may want to name as a beneficiary. Beneficiary designations often become outdated simply because they are set once and then forgotten. Accounts may be opened years apart, each with its own form, and updates are rarely triggered unless someone intentionally reviews them. An outdated designation can result in assets passing to the wrong person, regardless of what the estate plan says.

Mistake 2: No contingent (backup) beneficiaries

Many people name a primary beneficiary but stop there.

If that beneficiary passes away before you or with you and no backup is listed, the asset may be paid into your estate instead. This can trigger probate, create delays, and lead to results you never intended. Backup beneficiaries help ensure assets move smoothly, even when life does not unfold as expected.

Mistake 3: Naming minors improperly

Minors generally cannot receive assets outright.

When a minor child is named directly as a beneficiary, court involvement may be required to manage the funds until the child reaches adulthood. This process can be time-consuming, expensive, and public. Proper planning can allow assets to be managed for a minor without unnecessary court oversight.

Mistake 4: Conflicts with the trust or will

Beneficiary designations typically override the instructions in a will or trust.

That means even a carefully drafted estate plan can be undone by a conflicting designation on an account. This disconnect is one of the most common sources of confusion and family conflict. Alignment across all documents is essential for a plan to work as intended.

Mistake 5: Never reviewing beneficiary designations

Beneficiary forms should be reviewed regularly and especially after major life events.

Marriage, divorce, the death of a loved one, or the opening of new accounts are all times when a review should occur. Without periodic attention, designations often fall out of sync with current wishes.

Beneficiary designations deserve the same care as legal documents. When everything is aligned, families are spared confusion, delay, and unnecessary conflict. Good planning is not just about having documents in place. It is about making sure all the details point in the same direction.

If you want to learn more about how Rehberg Law Group attorneys work with clients who live outside the Seattle-Bellevue-Tacoma area, please give Rehberg Law Group a call at 206.246.8772.