The Beneficiary Form Check Every Senior Should Do This Summer (Before the Wrong Person Inherits Your IRA)

A widow named Mildred sat across my desk in June 2018 with a Fidelity statement and a problem she didn't yet understand. Her husband Theodore had died in March. The IRA, about $312,000, had a beneficiary form on file dated September 14, 1987. The named beneficiary was his first wife. They had divorced in 1992. Theodore had remarried Mildred in 1994, written a will leaving everything to her, and apparently never thought about the form again.

The will did not matter. The form did. Fidelity was legally obligated to pay the ex-wife. Mildred spent eleven months and roughly $18,000 in legal fees trying to claw it back, and got most of it eventually because the ex-wife was decent about it. She did not have to be. That is the part nobody tells you.

If there is one piece of paperwork in your file that deserves a quiet hour this summer, it is your beneficiary designations. Not your will. Your forms. Most of what people think of as estate planning — the lawyer's office, the notarized signatures, the binder on the shelf, runs through probate. Beneficiary forms do not. They run on autopilot, exactly as written, the moment a death certificate hits the custodian's desk.

I have been doing this work for 35 years. The single piece of advice I give clients more often than any other has nothing to do with portfolio allocation or Roth conversions or claiming Social Security at 67 versus 70. It is this: pull your beneficiary forms once a year. Read what they actually say. Most people have never seen the form on file at their own custodian. They signed something in 1992 or 2003 and assumed the system was tracking the rest.

The system is not tracking anything. The system is waiting for you to look.

Why the Form Beats the Will (Always)

A beneficiary designation is what attorneys call a non-probate transfer. It moves assets directly from the custodian to the named person at death, outside of probate, outside of your will, and outside of whatever fairness you imagined when you drafted your estate plan. The IRA goes where the form says it goes. So does the 401(k), the life insurance policy, the annuity, and any bank or brokerage account with a transfer-on-death or payable-on-death designation attached.

This includes accounts where you swore you updated the beneficiary years ago. I have sat with clients who were certain (absolutely certain) that they'd changed the form after a divorce or remarriage, and the custodian's file said otherwise. Custodians get acquired. Plans get rolled over. A 401(k) from a job you left in 2009 may now sit at a third recordkeeper who never received your update because the update went to the previous one.

Let me be direct about this. I have never audited a senior's beneficiary file and found zero problems. Not once in 35 years. The errors are usually small — a middle initial wrong, a contingent beneficiary blank, a child who got married and changed her last name. Sometimes the errors are catastrophic, the way Mildred's was. Either way, you find them by looking.

The Five Mistakes I See Most Often

All five are common.

1. The ex-spouse who never got removed. Divorce decrees in some states automatically revoke spousal beneficiary designations on probate assets. They do not always reach ERISA-governed retirement plans like 401(k)s. Federal law preempts state revocation statutes for those, which the Supreme Court confirmed in Egelhoff v. Egelhoff (2001) and again in Kennedy v. DuPont (2009). If you divorced and remarried, your 401(k) form must be physically updated. Your divorce decree did not do it for you. One related wrinkle for the nine community-property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin, plus Alaska as opt-in): a current spouse there generally has a community-property interest in retirement assets accumulated during the marriage. ERISA-governed 401(k) plans require current-spouse consent to name anyone else as primary beneficiary regardless of state, but IRAs do not — and a non-consenting current spouse in a community-property state can sometimes claim a community share against an ex-spouse who was left on the form. Talk to a local estate attorney if any of that applies to you.
2. The deceased child still listed as primary. A client's mother had three children on her form, equal shares. The middle son died in 2014. She never updated. When she died in 2020, the question of whether the deceased son's two children inherited his share depended entirely on whether her form said per stirpes or per capita, and hers said neither. Default rules vary by custodian. The estate sat in limbo for fourteen months.
3. "Estate of [your name]" listed as beneficiary. This sounds tidy and is almost always a disaster. Naming your estate as IRA beneficiary forces the account through probate, accelerates the income tax payout (an estate is not a designated beneficiary, so a five-year payout applies if the owner died before their required beginning date and a ghost-life-expectancy payout applies if the owner died after it — both worse than a designated-beneficiary outcome), and exposes the IRA to creditor claims. There are narrow situations where naming a trust makes sense. Naming the estate, almost never.
4. Kids treated unequally without anyone knowing. Mom had two children. The IRA form said "Susan, 100%." Mom had assumed the brokerage account (also with Susan as TOD) would equal out. The brokerage was smaller and Susan kept everything from the IRA outright. The brother got less than half. She never checked the math.
5. No contingent beneficiary at all. If your primary beneficiary predeceases you and there is no contingent named, the asset typically defaults to your estate. See mistake #3. Always name a contingent. Always.

A broader treatment of how these forms fit into property inheritance and tax strategies is worth reading later. The audit is the urgent part.

What SECURE 2.0 Changed (And Why It Matters Now)

The SECURE Act of 2019 and its sequel SECURE 2.0 (signed December 2022, with most provisions effective in 2023 and after) rewrote the inherited-IRA playbook. Before SECURE, a non-spouse beneficiary could "stretch" distributions over their own life expectancy. A 50-year-old daughter could inherit her father's IRA and pull from it across 34 years, paying income tax gradually.

That option is mostly gone. Under current rules, most non-spouse beneficiaries must drain the inherited IRA within 10 years of the original owner's death. The IRS finalized regulations in July 2024 confirming that if the original owner had already started RMDs, the non-spouse beneficiary must also take annual distributions during the 10-year window.

The 10-year rule does not apply to a category called Eligible Designated Beneficiaries (EDBs):

• Surviving spouse (and worth knowing separately what happens to your spouse's Social Security when they die, which is not governed by any beneficiary form)
• Minor child of the decedent (only until they reach the age of majority, at which point the 10-year clock starts)
• Disabled or chronically ill individual (per IRC §72(m)(7) definitions)
• Individual not more than 10 years younger than the original owner. This is the one most people miss; a sibling close in age qualifies

Why does this matter for your form? Because the wrong beneficiary choice now compresses the tax bill into a decade. If you leave a $600,000 traditional IRA to your 55-year-old son, he'll need to pull all of it out by age 65, likely during his peak earning years. The IRS publishes the rules in Retirement Topics – Beneficiary and the calculus matters: a Roth conversion during your lifetime, a charitable beneficiary swap, or naming a different family member entirely could save five figures in federal tax.

The form is a tax allocation decision compressed into one box. Treat it that way.

One more SECURE 2.0 wrinkle worth knowing. The Act phased in a higher RMD age, now 73 for those born 1951 through 1959 and 75 for those born 1960 or later. That changes the timeline for when the original owner is considered to have started RMDs, which in turn changes whether the inherited-IRA recipient must take annual distributions during the 10-year window. If you were 72 last year and turned 73 this year and have not yet taken a distribution, your form is sitting on a different set of rules than it was sitting on three years ago. Read it under the new rules.

Per Stirpes vs. Per Capita: The One Latin Phrase Worth Learning

Most beneficiary forms have a small box, often unchecked, that says "per stirpes" or sometimes "by right of representation." If you have grandchildren, you want to know what that box does.

Per capita (the default on many forms) means the asset divides among your living named beneficiaries. If you list three children equally and one predeceases you, the survivors split everything two ways. The deceased child's children, your grandchildren, get nothing.

Per stirpes means the deceased beneficiary's share passes down to their descendants. Same scenario, three kids, one dies first: the surviving two each get a third, and the deceased child's children split the remaining third among themselves.

Neither is automatically correct. Fidelity's primer on beneficiary designations calls this one of the most overlooked checkboxes in retirement planning. I agree. The right answer depends on whether you want to ensure your bloodline gets a share or whether you want your wealth to flow to whichever of your children outlive you. Both are defensible. Pick one on purpose. And confirm in writing that the custodian's form actually accepts your election. A few smaller insurance companies still default to per capita regardless of what you check; if you have grandchildren and that is the case, you may need to name them as direct contingent beneficiaries to get the same effect.

Your 30-Minute Summer Audit (Custodian by Custodian)

This is the part where I tell you what to actually do. Block a Saturday morning. Put on coffee. Pull out your folder.

1. Make a master list. Every retirement account (IRA, Roth IRA, 401(k), 403(b), 457, SEP, SIMPLE), every life insurance policy, every annuity, and every bank or brokerage account. Include accounts at former employers. Yes, even the one from 1998. Especially that one.
2. Log into each custodian's portal. Look for a tab labeled "Beneficiaries" or "Account Profile." If you cannot find it online, call the 800 number. The phrase to use: "I'd like to confirm the current beneficiary designations on file for this account." They will read them to you.
3. Print or screenshot what's on file. Date it. Put it in a folder. This is your baseline.
4. Cross-check against life events. Marriage, divorce, birth of a child or grandchild, death of a named beneficiary, change in your wishes about who gets what. If anything has shifted since the form's effective date, the form is probably wrong.
5. Update in writing. Most custodians require a fresh signed form, not a verbal update. Some accept e-signature; some do not. The form is not effective until they confirm receipt. Keep the confirmation email or letter.
6. Check TOD/POD on bank and brokerage accounts. Transfer-on-death applies to brokerage; payable-on-death applies to bank. These are separate from retirement-account beneficiaries and often forgotten entirely. AARP's guidance on non-probate transfers is solid if you want a primer.
7. Don't forget life insurance. The policy you bought through your employer in 1996 may still list your sister. Or your mother. Or nobody, if she's passed.
8. Add the digital layer. Your retirement custodian sends statements by email now. Your password manager controls access to half your financial life. None of this is captured on a beneficiary form, but digital estate planning for online accounts is the companion exercise. Do them in the same sitting.

Thirty minutes is optimistic for the first audit. Two hours is realistic. After that, an annual five-minute check is enough.

When to Use a Trust as Beneficiary (And When Not To)

This gets technical, but bear with me. It matters. Naming a properly drafted see-through trust as beneficiary of an IRA can make sense in specific situations: a spendthrift adult child, a disabled beneficiary on means-tested benefits, a blended family where you want to provide for a current spouse without disinheriting kids from a prior marriage. But a poorly drafted trust as IRA beneficiary triggers the five-year payout rule and a fully taxable acceleration. The difference is usually a single sentence about whether all trust beneficiaries are identifiable individuals.

If a trust is on any of your beneficiary forms, ask your estate attorney, by name, in writing, whether it qualifies as a see-through trust under the post-SECURE regulations. If they hesitate, you have your answer.

And if you do not have an estate attorney, that is its own conversation. Most state bar associations run a referral service for under $50 per consult. Worth every dollar. The broader picture of how to leave an inheritance for your children, what to title in whose name, what to gift during your lifetime, what to leave outright versus in trust, sits one layer above the beneficiary form. The form is the floor. The strategy is the building.

What to Do Right Now

Get the folder. Make the calls. Print the confirmations.

A Quiet Reassurance

I know this sounds tedious. It is tedious. But the people I have seen do this audit, year after year (I am thinking now of a retired Sikorsky engineer named Tom, 78, who walks into his updated forms meeting every January like other people walk into a haircut), those clients leave nothing for their families to untangle. Their kids inherit money, not problems.

Mildred eventually got most of Theodore's IRA back. The thing she told me, sitting in my office in May 2019 when it was finally over, was this: "I keep wondering if Theodore knew. I keep wondering if he just didn't think it mattered."

It mattered. It always matters. And the form is in a drawer somewhere, waiting for you to pull it out.

You have done harder things than this. Block the morning. Make the calls. Then go enjoy your summer.