Updating Beneficiary Designations: The Overlooked Step That Can Disrupt Your Estate Plan
When families think about estate planning, they usually picture wills and trusts. But one of the most common mistakes we see isn’t about those documents at all—it’s about beneficiary designations.
Beneficiaries are named on accounts like life insurance policies, retirement plans, and payable-on-death bank accounts. These designations determine where the money goes when you pass away. The problem? Beneficiary designations override your will or trust.
That means if your trust says “divide equally among my children,” but your IRA still names only your eldest child as beneficiary, your eldest will inherit the account outright—even if that wasn’t your intent.
Why Beneficiaries Are Often Overlooked
- Forms are filled out when the account is opened—sometimes decades ago
- Life events like marriage, divorce, or the birth of children aren’t followed by updates
- Families assume their will or trust “controls everything,” which isn’t true
Common Problems We See
- Ex-spouses listed after divorce, leaving assets to the wrong person
- No contingent beneficiary listed, resulting in probate
- Deceased beneficiaries still on file, creating unnecessary delays
- Conflicts with a trust—causing assets to bypass carefully designed plans
How to Fix It
- Make a list of every account with a beneficiary designation
- Review each one annually, especially at year-end
- Ensure they align with your broader estate plan
- Update immediately after major life changes
Why This Matters in Washington and Oregon
Both states have probate systems that can be avoided or minimized with proper planning. But even the best will or trust can be undermined by outdated beneficiary forms.
The Bottom Line
Your estate plan is only as strong as its weakest link. By aligning beneficiary designations with your will or trust, you give your loved ones the gift of clarity and consistency.
At Pettis Webber Pacific, we help families in Washington and Oregon catch these small details before they become big problems.
Schedule your year-end beneficiary review today—it’s one of the simplest ways to protect your legacy.