Why your will does not control everything

A will does not control everything you own. Retirement accounts like IRAs and 401(k)s pass directly to whoever is named on the beneficiary designation form, regardless of what your will says. If those designations are outdated, the money can go to the wrong person, which is why reviewing them regularly is so important.

A common and costly assumption

It is natural to believe that once you have a will in place, your wishes are settled. You named who gets what, you signed the documents, and the matter feels closed. For many of your assets, that is largely true. But for some of the largest accounts most retirees hold, the will is not the document in charge.

Retirement accounts such as IRAs and 401(k)s do not pass through your will at all. They pass by beneficiary designation, the form you filled out when you opened the account, sometimes decades ago. Whoever is named on that form receives the money, even if your will says something completely different.

How beneficiary designations actually work

A beneficiary designation is a direct instruction to the account custodian. When you pass, the custodian looks at that form and transfers the account accordingly. This happens outside of probate and outside of your will. That can be a benefit, since the transfer is usually faster and simpler. It can also be a problem when the form no longer reflects your life.

Consider how often an old form can fall out of step with your intentions:

• A former spouse is still listed after a divorce.
• A child born after the account was opened was never added.
• A beneficiary has passed away and no one updated the form.
• An account was rolled over and the new account has no beneficiary at all.

Small details, large consequences

Each of those situations can quietly redirect a significant amount of money. Because the designation overrides the will, even a carefully written estate plan cannot fix a stale form after the fact. The good news is that this is one of the simplest parts of your plan to keep current. Reviewing your beneficiary forms takes little time and can prevent an outcome you never intended.

A practical habit is to review your designations whenever a major life event happens, such as a marriage, divorce, birth, death, or account rollover, and then again every few years just to confirm nothing has slipped. If you are coordinating these forms alongside a will or trust, an advisor can help make sure the pieces work together rather than against each other.

Frequently asked questions

Does my will override my IRA beneficiary designation?

No. The beneficiary designation on the IRA controls who receives the account, and it takes precedence over what your will says. To change who inherits the account, you have to update the designation form itself.

How often should I review my beneficiary designations?

Review them after any major life event such as a marriage, divorce, birth, or death, and then every few years as a routine check. This helps ensure the forms still reflect your current wishes.

What happens if my retirement account has no beneficiary named?

If no valid beneficiary is on file, the account may pass according to the custodian's default rules or through your estate, which can lead to delays and outcomes you did not intend. Naming and updating a beneficiary avoids that uncertainty.