Understanding the Importance of Beneficiary Forms in Your Estate Plan

July 8, 2022
Alec Borenstein

Beneficiary designation refers to naming an individual who will inherit an asset from someone, such as a spouse or loved one, in the event of their death. Life insurance policies and retirement accounts (IRAs, 401ks) are two common examples of assets that are transferred to beneficiaries upon someone’s passing. Beneficiary forms are an essential part of an estate plan as they bypass the probate process and guarantee that assets go directly to the beneficiaries named on the accounts. While this concept appears to be very straightforward, there are several important considerations and mistakes to avoid when designating beneficiaries.

Beneficiary Forms: Essential Part of an Estate Plan

 An individual may name an entity, such as a charitable organization, a trust, or their estate, instead of an individual as the beneficiary of assets they wish to pass down. When someone names their estate as the beneficiary of their assets, the assets are dispersed according to the provisions listed in that individual’s trust or will. However, here are important facts to be aware of when making beneficiary designations:

  • Wills do not supersede beneficiary designations. Retirement account and life insurance beneficiary designations will override will and trust directives, so your will and other estate plan documents must align with your beneficiary forms.
  • Conversely, it is also essential for your beneficiary forms to echo what is documented in your estate plan. For example, if a life insurance policy is being left to a testamentary trust for a beneficiary, the beneficiary form for this life insurance policy also needs to reflect this information.
  • Naming the wrong beneficiary or no beneficiary could have costly consequences for your estate and loved ones. It can cause assets to flow through your estate, which could trigger a large tax bill for your heirs to contend with, as opposed to proactively naming an individual on the beneficiary form who will then be able to stretch distributions and taxes owed over time.

Enlisting the Expertise of an Estate Planning Attorney

While designating a beneficiary is an action taken separately from the rest of the estate planning process, it is an important component. Because it is critical to coordinate your beneficiary forms with your estate planning documents carefully, it is recommended to enlist a skilled estate planning attorney. This legal professional is well-versed in estate planning law and will ensure that your estate plan is set up to safeguard your assets and protect your loved ones after your passing.

  • Your estate planning attorney will ensure that all your beneficiary forms are periodically reviewed, updated, and carefully coordinated with your will and other estate plan documents to avoid conflicts and delays in distributions from your estate at the time of your death.
  • Your estate planning attorney works as your partner to ensure that your beneficiary designations are set up to protect your estate and your heirs from unnecessary taxation.  

Beneficiary Forms Help Fortify Your Estate Plan

When beneficiary forms are regularly reviewed and updated, they collaborate with your estate plan to distribute your assets exactly as you wish when you pass away.

  • It is recommended to review and update all beneficiary forms directly after milestone events, such as a marriage, divorce, spousal death, childbirth or adoption. Changing or adding beneficiaries is a relatively straightforward process that can be done by submitting a change-of-beneficiary form.
  • It is important to note that beneficiary forms don’t carry over when you change jobs and roll over a 401k to a new employer’s plan or an IRA or convert a regular IRA to a Roth IRA. Updating your beneficiary forms is imperative upon starting new employment.
  • Beneficiaries can be designated on various accounts, including bank accounts, certificates of deposit, U.S. savings bonds, stocks, retirement accounts, and more. It’s easy to forget your named beneficiaries on every account, especially if the funds were opened several years ago.  


When you enlist Estate Planning to assist you in carefully planning your estate, you have recruited a trusted partner to ensure that your estate plan is properly managed and kept current, especially as important life events take place and your situation changes. Consult with BMC Estate Planning and learn more about the importance of beneficiary forms and how they help fortify your estate plan.

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About us

Borenstein, McConnell & Calpin, P.C. is a Wills & Estate Planning law firm serving Central and Northern New Jersey, as well as New York City. We strive not only to give you a great client experience, but to become your trusted adviser for life. To reach Alec, please send an email to alec@bmcestateplanning.com.

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