Review Those Beneficiary Designations — Especially After Major Life Changes
When it comes to financial planning, few details carry as much weight as your beneficiary designations. They may seem like just another form you filled out years ago when opening an account or signing up for life insurance, but these choices determine where some of your most important assets will go. What many people don’t realize is that beneficiary designations override your will or estate plan. That means, no matter what your will says, the person listed on your retirement account or insurance policy will inherit those funds. For that reason alone, it’s essential to keep your designations current and intentional.
Review and Refresh
Life is never static, and your beneficiary list shouldn’t be either. Major milestones—marriage, divorce, the birth of children or grandchildren, even a career change—can shift your priorities and your wishes. Left unchecked, outdated designations can cause assets to flow to someone you no longer intend, create unnecessary tax burdens, or trigger family conflict. Reviewing these choices every few years, or whenever there’s a significant life change, ensures that your financial plan reflects the life you’re actually living.
Divorce, in particular, is one of the most common times when beneficiary designations need attention. Many assume that a divorce automatically removes an ex-spouse from all accounts, but the reality is more complicated. Some states revoke those designations automatically; others, including Maryland, do not. In many cases, the responsibility falls on you to make the change. Updating each account separately is essential, since designations on retirement plans, insurance policies, and annuities don’t change just because you updated your will. Overlooking these details could mean that assets end up in the wrong hands—or tangled in probate.
When Keeping Your Ex as Beneficiary Makes Sense
Yet it’s worth noting that there are situations where keeping a former spouse as a beneficiary may actually make sense. If you share minor children, for example, naming your ex-spouse as a beneficiary can simplify how resources flow to support them, especially if that spouse is their guardian. In blended family situations, or when financial responsibilities continue even after divorce, you might find that retaining a former spouse in some capacity provides stability and predictability. Sometimes this means leaving them as a primary beneficiary, though more often it may involve shifting their role to a contingent beneficiary or creating clear rules through a trust. The key is to make these decisions intentionally, not by default.
Keep it Simple
Reviewing beneficiary designations is a regular task for our financial planning clients at Clairwell, but you can do this on your own even if your advisor doesn’t. The process of updating your beneficiaries doesn’t need to feel overwhelming. Start by making a list of your accounts—retirement plans, life insurance, annuities, even health savings accounts. Pull up your current designations and decide whether they still reflect your wishes. Once you’ve clarified your intentions, contact the custodians or insurers directly to file updated forms. It’s also wise to let the trusted people in your life—such as your executor or financial advisor—know where to find this information, even if you don’t share the details. And just as you revisit your financial plan periodically, commit to reviewing your designations every few years or after major life events.
Ensure Your Assets Pass on as You Intend
Beneficiary designations are one of the simplest yet most powerful tools in your financial plan. They give you direct control over who receives certain assets and can spare your loved ones the delay and complications of probate. But like so much in life, they require care and attention over time. Whether you are revising them after a divorce, considering the needs of children, or simply ensuring your intentions remain clear, the goal is the same: to make sure your wealth supports the people and priorities that matter most to you. If you’d like guidance in reviewing or updating your beneficiary plan, especially in the context of complex family dynamics, we’re here to help you think it through and put it into place with confidence.
