Does my beneficiary designation override my will?

Yes. The beneficiary named on a retirement account or life insurance policy generally supersedes your will. Regardless of what your will says, those assets pass to the listed beneficiary—unless you've named your estate as the beneficiary. Updating your will does not update these accounts, so you need to keep both current.

Do I need my spouse's consent to name someone else as my beneficiary?

For qualified employer plans such as a 401(k), 403(b), or pension, federal law automatically treats your spouse as the primary beneficiary unless they consent in writing to another choice. IRAs generally let you name anyone without spousal consent, except in community property states, where your spouse may still have a claim.

What happens if I don't name a beneficiary?

If you leave the beneficiary field blank, the account generally passes to your estate and is distributed through your will in probate—a slower, more public, and potentially more expensive process. Naming a beneficiary lets the assets transfer directly to your heirs and bypass probate.

Can I name a minor as my beneficiary?

Not directly—minors can't inherit assets as direct beneficiaries. If you name one without a plan in place, a court will appoint a guardian to manage the money, possibly someone you wouldn't have chosen. Naming a guardian yourself, or setting up a trust with a trustee, gives you more control over how and when the assets are used.

How often should I review my beneficiaries?

Review your beneficiary designations every few years, and after any major life event—marriage, divorce, a birth or adoption, a death in the family, or a significant change in your assets. These accounts don't update automatically, even when the event involves legal documentation.

The Importance of Updating Your Retirement Account Beneficiaries

If you’ve ever opened a retirement account, chances are you were required to name a set of beneficiaries. You may not remember who you named and/or know exactly what doing so entails, but unless you left the field blank (a rare occurrence nowadays), it’s likely that one of your loved ones is set to inherit your assets after you pass away.

As you might imagine, naming your beneficiaries is a big responsibility; but most of us don’t think to review and update this on our policies as often we should. Read on to learn more about the importance of keeping your beneficiary list as up-to-date as possible and how to avoid making a costly mistake with your major retirement assets.

Key Takeaways

What a beneficiary is: The person or entity you name to inherit assets on retirement accounts, insurance, or brokerage accounts — with primary and contingent tiers you can split multiple ways.
Why it matters: Named beneficiaries typically bypass probate, moving inheritances to heirs faster and cheaper than through your will.
Beneficiaries override your will: Whatever your will says, the account's listed beneficiary controls where those assets go — unless you name your estate.
Update after life events: Marriage, divorce, births, or deaths don't automatically update your designations, so revisit them every few years or after big changes.
Inherited-account clock: most non-spouse heirs must now empty an inherited retirement account within 10 years under the SECURE Act.

What is a beneficiary?

Primary vs. contingent beneficiaries

Most accounts let you name both tiers—and split each one among several people by percentage.

Primary

First in line

The person or people who inherit first. You can name several and assign each a percentage (for example, 50% to each of two children).

Contingent

The backup

Inherits only if every primary beneficiary has died or can't be located. Your safety net if the unexpected happens.

Naming a contingent beneficiary keeps your assets from defaulting to your estate—and into probate. General information, not individual advice.

A beneficiary is an individual or entity named as the inheritor of your assets on financial products such as retirement accounts (e.g., 401(k)s and IRAs), bank and brokerage accounts, and life insurance policies: often an individual’s spouse, children, parents, friends, or other loved ones (or even charities, in some cases). You can also name your own estate as a beneficiary, thus dividing your assets per your wishes in your trust or will.

There are two types of beneficiaries: primary and contingent. The former is the first person/people who will receive your assets, while the latter is the person/people who will receive your assets only if the primary beneficiary is deceased or otherwise unavailable to receive the funds. You can name multiple primary beneficiaries and also apportion the asset according to how much you want each party to receive.

Per stirpes vs. per capita: what happens if a beneficiary dies first

Most beneficiary forms also ask you to choose between two options that decide what happens to a person's share if they pass away before you do: per stirpes or per capita. Say you've named your three children as equal primary beneficiaries and one of them dies before you, leaving two children of their own. Under "per stirpes" (Latin for "by branch"), that child's one-third share passes down their family line to their two children—your grandchildren—while your other two children keep their shares. Under "per capita" ("by head"), the share is instead divided among your surviving beneficiaries at the same level, so your two living children split everything and that branch's grandchildren receive nothing. It's the same family and the same starting designation, but a very different result depending on which option you choose—so it's worth checking how your specific form handles it, since the available choices and defaults vary by custodian and state.

Per stirpes vs. per capita

What happens to a beneficiary's share if they die before you do.

The scenario: you name your 3 children as equal beneficiaries—and one dies first, leaving 2 children of their own.

Per stirpes

"by branch"

That child's one-third passes down their family line to their 2 children (your grandchildren), who split it. Your other 2 children keep their shares.

Per capita

"by head"

That child's share is split among your surviving beneficiaries—your 2 living children now get half each. The grandchildren in that branch receive nothing.

Options and defaults vary by custodian and state—check how your specific form handles it. General information, not individual advice.

What’s the purpose of naming beneficiaries?

As an important estate planning tool for simplifying the settling of your assets—including your retirement accounts—naming your retirement account beneficiaries ensures your assets will go to the right people upon your death.

If you’ve named beneficiaries on your retirement accounts, your heirs can also potentially bypass probate (the legal process used to administer a person’s estate after their death, including verifying their will is valid and authentic): meaning they’ll receive their inheritance much quicker.

Why should I update my beneficiaries?

Revisit Your Beneficiaries After…

These accounts don't update themselves. Review your designations after any of the following—and every few years regardless.

MarriageA new spouse isn't added automatically.

DivorceAn ex may still be listed unless you remove them.

A birth or adoptionNew children aren't included until you add them.

A death in the familyA listed beneficiary may have passed away.

A major change in assetsNew accounts need designations of their own.

Every few yearsEven with no big event, confirm it still reflects your wishes.

A five-minute review can prevent an inheritance from going to the wrong person. General information, not individual advice.

Unfortunately, your life insurance and retirement plan beneficiaries don’t automatically update—even in the case of major life events that entail legal documentation such as divorce, marriage, death, or birth.

Consequently, individuals listed on your policies (e.g., ex-spouses or friends and family) may have since passed away. Furthermore, you may accidentally exclude important loved ones—such as children born after you initially established beneficiaries on these accounts—meaning retirement assets may not be split based on your true desires. Worse yet, these individuals who may feel like they were shortchanged could seek to contest your beneficiary designations in court: delaying the distribution of your assets and potentially dividing your family.

With that said, it’s best to review your beneficiaries every few years or after any major life event such as marriage, divorce, births, deaths, severe injury, or anything similar that might change your prioritized list of inheritors.

I updated my will. Do I still need to update my beneficiaries?

Don't get caught out

Your beneficiary form beats your will

The beneficiary named on your 401(k), IRA, or life insurance policy controls who inherits it—even if your will says something different. Updating your will does not update those accounts, and updating an account does not change your will. Keep both current, and make sure they agree.

While you’re off to a great start by even having a will in the first place (most adults in fact don’t), you still need to ensure your beneficiaries are up-to-date: as the beneficiaries listed on your retirement accounts or insurance policies generally supersede your will. In other words, regardless of what your will says, those assets will pass onto the listed beneficiaries on those accounts (unless you list your estate as your primary beneficiary).

Other considerations when updating beneficiaries

If you're married, the rules differ depending on the type of account. For qualified employer plans—such as a 401(k), 403(b), or pension—federal law automatically treats your spouse as the primary beneficiary no matter where you live. To name anyone else (or add someone alongside your spouse), you generally need your spouse's written consent.

Individual retirement accounts (IRAs) work differently: in most states you can name whomever you like without your spouse's consent. The exception is community property states, where your spouse may be entitled to a share of the account and may need to consent in writing before you name someone else. These states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin—so if you live in one, it's worth confirming the rules before you finalize your choices.

If you decide to bequeath your retirement assets to a minor, be sure to name a guardian since minors cannot inherit assets as direct beneficiaries; otherwise, the court will appoint one for you (perhaps someone you would not have otherwise selected). An even better idea is to set up a trust (another method used to transfer assets after you pass away) and appoint a trustee (a person or entity) to manage it. In this scenario, a trust provides additional flexibility as you can spell out specific requirements that must be met for your children to receive their money (e.g., the age at which they can receive portions of their inheritance or an event dictating the same, such as college graduation).

Similarly, you should avoid naming beneficiaries who are disabled and dependent on government assistance as this can potentially delay or even disqualify them from receiving these benefits; you can instead create a special needs trust so a trustee can cover expenses not covered by the government.

Who you name now affects how fast your heirs are taxed

Who inherits—and how fast they must withdraw

Under the SECURE Act, the beneficiary category sets the withdrawal clock on an inherited retirement account.

Surviving spouse

Most flexible

Can roll the account into their own and delay withdrawals until their own RMDs begin—then name their own beneficiaries.

Eligible designated beneficiary

Lifetime stretch

Minor children of the owner, those who are disabled or chronically ill, and anyone not more than 10 years younger can still spread withdrawals over their life expectancy.

Everyone else

10-year rule

Most non-spouse heirs must empty the account within 10 years—and take an annual withdrawal in years one through nine if the owner had already started their own RMDs.

Rules reflect the SECURE Act and 2024 final regulations; annual withdrawals apply starting in 2025. General information, not individual advice.

Naming the right beneficiary isn't only about who inherits — it also shapes how quickly they have to withdraw the money and pay the resulting taxes. The SECURE Act, which took effect in 2020, changed the rules significantly, and the IRS finalized them in 2024. How your heirs are treated depends on which category they fall into.

Surviving spouses have the most flexibility

A spouse you name as beneficiary can roll your IRA into their own and treat it as if it were always theirs—delaying withdrawals until their own required minimum distributions (RMDs) begin and naming their own beneficiaries down the line. This is typically the most tax-efficient outcome, and it's one reason the automatic spousal rules on qualified plans exist.

Most other individuals now face a 10-year deadline

Before the SECURE Act, a non-spouse heir (such as an adult child) could "stretch" withdrawals—and the tax bill—across their entire life expectancy. That option is gone for most beneficiaries. Today, most non-spouse heirs must empty the inherited account within 10 years of the original owner's death. And under the final 2024 regulations, if you had already begun taking your own RMDs before you passed away, your heir must also take an annual RMD in each of years one through nine—then clear out whatever remains by the end of year 10. These annual withdrawals are required beginning with the 2025 tax year. For an heir in their peak earning years, compressing a large account into a single decade can push them into higher tax brackets.

A few heirs still get the lifetime stretch

The law carves out a group called "eligible designated beneficiaries" who can still spread withdrawals over their life expectancy: surviving spouses, your minor children (until they reach the age of majority, at which point the 10-year clock starts), beneficiaries who are disabled or chronically ill, and anyone not more than 10 years younger than you.

The takeaway: the person or entity you name doesn't just determine who receives your retirement assets—it can meaningfully change the tax bill your loved ones face. It's worth factoring these rules into your choices and revisiting them with a financial or tax professional, especially if your situation has changed since you first set up the account.

Need help managing your assets? We’ve got you covered.

Planning for retirement (and beyond) is often a difficult process when you choose to do so all on your own. You may lack the legal knowledge or the time to sit down and determine where your money is going and when. You may not even know what you need to take care of in order to ensure a smooth, stress-free retirement!

Fortunately, our Vision Retirement team is well-versed in helping people manage their assets and documents as they transition from one stage of life to another. We can help you with the same while also offering guidance on crucial steps you or your loved ones need to take. Contact us today to embark on your journey.

Beneficiary designations are one part of a complete plan — see all the pieces in our estate planning checklist.

Have questions about estate planning? Schedule a FREE discovery call with one of our CFP® professionals to get them answered.

Reviewed for accuracy

Paul Muller, AEP®, CFP®

Founder and Relationship Manager at Vision Retirement, with 30+ years in the financial industry.

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FAQs

Yes. The beneficiary named on a retirement account or life insurance policy generally supersedes your will. Regardless of what your will says, those assets pass to the listed beneficiary—unless you've named your estate as the beneficiary. Updating your will does not update these accounts, so you need to keep both current.
For qualified employer plans such as a 401(k), 403(b), or pension, federal law automatically treats your spouse as the primary beneficiary unless they consent in writing to another choice. IRAs generally let you name anyone without spousal consent, except in community property states, where your spouse may still have a claim.
If you leave the beneficiary field blank, the account generally passes to your estate and is distributed through your will in probate—a slower, more public, and potentially more expensive process. Naming a beneficiary lets the assets transfer directly to your heirs and bypass probate.
Not directly—minors can't inherit assets as direct beneficiaries. If you name one without a plan in place, a court will appoint a guardian to manage the money, possibly someone you wouldn't have chosen. Naming a guardian yourself, or setting up a trust with a trustee, gives you more control over how and when the assets are used.
Review your beneficiary designations every few years, and after any major life event—marriage, divorce, a birth or adoption, a death in the family, or a significant change in your assets. These accounts don't update automatically, even when the event involves legal documentation.