Why You Should Review and Update Account Beneficiaries Regularly

When you set up your retirement account, or buy life insurance, chances are that you asked who you would like your beneficiaries to be. This is an important piece of information, since it determines what happens to your money after you are gone. It’s also important to double check the beneficiaries on your account regularly, since there might be changes to your situation that makes it necessary to re-evaluate what happens to your money after you die.

Your Beneficiaries

Beneficiaries are those who are slated to receive your assets. They are the people that receive the benefits associated with your account. Life insurance benefits, the balance of your retirement account, your annuity benefits, and other assets go to the person(s) you designate as your beneficiaries. For those who are married, this is usually a spouse. You can designate secondary beneficiaries as well. My Health Savings Account, for example, has my husband listed as the first beneficiary, and my son as the second. If something happens to me and my husband at the same time, the account is set up to benefit my son.

Beneficiaries on an Account Trump What’s in a Will

There is the idea in our society that the will is the be all and end all when it comes to dividing up your assets. However, this is not the case. On accounts where a beneficiary is listed, that is the information that is used.

While a will describes the way you’d like your assets distributed, it isn’t the document with the most legitimate claim. Whoever is listed on your account, or insurance policy, is who will get the money. Many people forget this information, or forget that they need to change beneficiary information if it is different from what is in the will. You can save a lot of trouble if you keep this in mind.

When Should You Change Beneficiaries?

For the most part, you should change your beneficiaries when a major life event changes the situation. Some of those life events might include:

  • Addition to the family
  • Divorce
  • Death
  • Change in your own views of what should happen with your money

If you are divorced, but don’t change your retirement account beneficiary information, your ex might get what’s in that account — even if you don’t want him or her to have the money. Whenever you have a major life event, it’s a good idea to change your beneficiaries to reflect the current state of things.

It’s a good idea to review your beneficiaries regularly. During your regular financial checkup (quarterly, semi-annually, or annually) make sure that you review the beneficiaries on your account. You want to make sure that everything is up to date. It doesn’t take very long, and it’s a crucial part of estate planning.

How to Change the Beneficiaries on Your Account

Whether you are changing the information on an investment account, or on your life insurance policy, you will need to find out the proper procedure. In some cases, it’s fairly straightforward: You contact the insurer or the account trustee/custodian and request the change. You usually have to show some sort of proof that you are the account holder, but you can usually change the beneficiary fairly easily.

Some companies don’t offer such a simple process, though. If you want to change your beneficiaries, call up the insurer or trustee/custodian to find out what you need to do. On some products, like annuities, it might be a rather involved process. Find out which forms you need, and where they need to be submitted. Also, be sure to gather any documentation that you might need.

Bottom Line

Most of us have a fairly clear idea of where we want our money to go. Estate planning efforts are expended so that our assets accomplish what we want them to. However, it’s important to pay attention. Listed beneficiaries overcome any later wishes expressed in other documents. If a change is to be made, it needs to be made on your account, after following proper procedure.


By , on Aug 20, 2012
Miranda Marquit Miranda is a professional personal finance journalist. She is a contributor for several personal finance web sites. Her work has been mentioned in and linked to from, USA Today, The Huffington Post, The San Francisco Chronicle, The New York Times, The Wall Street Journal, and other publications. She also has her own personal finance blog: Planting Money Seeds.


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{One Comment}

  1. Denni Dattilio:

    Since all of our children are minors, we were advised to list our family trust as the secondary beneficiary after our spouse. That way our trustee and gaurdian can use the money to raise the kids until they reach majority.

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