You’ve built your wealth with intention. You’ve likely set up a will or estate plan. You may have even completed beneficiary forms for your retirement accounts and life insurance policies years ago. But here’s a critical step that many people overlook: making sure your loved ones know these accounts exist—and that your beneficiary designations still reflect your wishes.

This isn’t about sharing every financial detail. It’s about giving your beneficiaries the clarity they’ll need if something happens to you.

Why Communication Is Key

If you’ve named someone as a beneficiary, they won’t automatically be notified when you pass away. In many cases, they’ll need to contact the financial institution and provide documentation to claim the benefit. If they don’t know an account or policy exists—or if the paperwork was never kept—they may never claim what’s rightfully theirs.

This is especially important for retirement plans and life insurance policies, where billions of dollars go unclaimed every year simply because beneficiaries were unaware.

Your Life Changes—So Should Your Beneficiaries

Beneficiary forms aren’t a “set it and forget it” task. Life changes—marriage, divorce, birth of a child, death of a loved one, or even a shift in your values—can all affect your intentions.

Review your designations every few years, and especially after major life events. Outdated forms could result in assets going to someone you no longer intend to receive them—or bypassing someone you do.

What You Need to Know About Common Accounts

Employer-Sponsored Retirement Plans (401(k), 403(b), etc.)

These plans are governed by federal ERISA rules, which give your spouse automatic rights to at least 50% of the account upon your death—regardless of who is named on the form. A spouse can waive this right, but only with written consent, and often only after age 35.

If you remarry, your new spouse typically becomes entitled to 50% of these assets at death, unless they waive that right. This can override previous designations unless updated.

IRAs

IRAs fall under state law, not ERISA, which means a spouse does not automatically receive the account. You have full control over who receives your IRA—whether it’s a spouse, child, or someone else. This makes it even more important to regularly review and update your designations.

Life Insurance

Proceeds go directly to the named beneficiary—no probate needed. However, if your beneficiary doesn’t know the policy exists, they won’t know to file a claim. Insurers are not required to track down beneficiaries. Billions in life insurance payouts have gone unclaimed simply due to lack of awareness.

Brokerage and Bank Accounts

Many financial institutions allow you to add a beneficiary designation using a Transfer on Death (TOD) or Payable on Death (POD) form. This allows your accounts to bypass probate and go directly to your chosen heirs.

Don’t Leave It to the Estate (Unless You Intend To)

If no beneficiary is named—or if all named beneficiaries have passed away—assets typically pass to your estate. This triggers the probate process, which can delay distribution, increase costs, and limit certain tax benefits. Naming both primary and contingent (backup) beneficiaries can help prevent this situation.

Considerations When Naming Beneficiaries

• You can name multiple beneficiaries and assign them different percentages.
• Minor children generally cannot inherit assets directly, so consider naming a trust or custodial account.
• Charities can be excellent beneficiaries for retirement accounts since they won’t pay income tax on distributions.
• Trusts can provide structure and control over how assets are used, but require careful setup to avoid tax complications.
• Non-U.S. citizen spouses and foreign beneficiaries may face different tax rules and reporting requirements.

Keep the Paper Trail Clear

Wherever you store your will or estate plan documents, include:

• A list of your active accounts and policies
• Contact information for each institution
• A copy of your current beneficiary forms
• Instructions for how to claim the benefits

Even a short-written summary can save your heirs significant time and confusion.

The Takeaway: Beneficiary Designations for Retirement Accounts

Beneficiary designations are more than a formality—they’re legal instructions that determine who receives your retirement assets, insurance payouts, and financial accounts. Keeping them accurate and making sure your loved ones are aware of them helps ensure your wishes are carried out smoothly and without added stress or legal complications.

At Navalign Wealth Partners, we help clients manage these important details as part of a broader financial strategy. If you’re unsure where your forms stand—or want help aligning them with your goals—let’s connect. Together, we’ll make sure your wealth goes exactly where you intend.