Estate planning isn’t just a practical financial move—it’s a lasting gift of love and peace of mind for the people you care about most. A thoughtfully prepared will or estate plan ensures your wishes are honored and your assets are distributed as you intend after you pass away. More importantly, it can spare your family unnecessary stress during a difficult time.  

LeRoy Peterson, an Omaha-based estate planning attorney, said many of his clients decide to get their affairs in order after the death of a family member who didn’t set up a will. “The loved one has had to deal with going through that whole process with someone who hadn’t planned in advance in and, I hear that quite often, ‘I just want to make sure my family doesn’t have to go through what I went through,’” he told First Alert 6.

What should be at the top of your estate planning checklist? Naming your beneficiary. In this guide, we’ll cover what a beneficiary is, why it matters, and steps you can take today to secure your legacy for future generations.  

What is a beneficiary?

A beneficiary is the person (or people or entities) you choose to receive the assets listed in your will or accounts after you pass away. This can include money, property, personal belongings, and life insurance payouts.

Beneficiaries can be:

• A spouse (or long-term partner)
• Family members, including adult children
• Close friends
• Charities or nonprofits important to you
• Organizations you want to support
• Groups of people (e.g., all your grandchildren)

   

Naming a beneficiary is a way to keep control over how your legacy is passed on. This small but impactful step makes your intentions clear, whether it’s leaving an inheritance for your children or ensuring your spouse is financially secure in the years ahead.

Note: It's important not to confuse a beneficiary of an estate with a Medicare beneficiary. The latter is someone who is enrolled in Medicare and receives health coverage through the program. Additionally, an estate beneficiary is not the same as a power of attorney agent—someone you choose to make financial or medical decisions for you while you’re still alive if you can’t speak for yourself. 

Who cannot be named as a beneficiary?

Some people can’t be named as beneficiaries on certain accounts. For example, children under 18 (or in some states, under 19 or 21) can’t directly inherit money from a retirement account or life insurance policy. If you list a minor child as a beneficiary, the court will appoint someone to manage the money for them until they’re old enough to receive it.

One way to avoid this is by setting up a trust and naming that trust as a beneficiary of your estate. A trust is a legal setup that manages your inheritance for your heirs. You can name your minor heirs as beneficiaries of the trust and determine when they can access the money, depending on your state’s laws and your personal wishes.  

When do you need to name a beneficiary?

It’s best to name a beneficiary when you create an estate plan or any time you open a financial account that allows beneficiary designations. Common examples include: 

• When drafting or updating your will
• When opening bank or brokerage accounts
• When purchasing life insurance policies
• When creating retirement accounts like individual retirement accounts (IRAs) or 401(k)s 

   

• When setting up annuities

   

The earlier you designate a beneficiary, the better. Life is unpredictable, and naming one helps safeguard your wishes.  

What are the different types of beneficiaries?

There are two main types of beneficiaries:

Primary

A primary beneficiary is your first choice—the person or entity who will receive your assets directly. For example, you might name your spouse as the primary beneficiary of your life insurance policy. 

These are the steps to take in naming a primary beneficiary: 

1. Decide who you want as your primary beneficiary.
2. Specify what portion of the asset they should receive (100% or divided among multiple people).
3. Keep your records updated if any major life changes occur, such as marriage, divorce, or the passing of a family member.

Contingent

A contingent beneficiary (sometimes called a secondary beneficiary) is your “backup plan.” They only inherit your assets if your primary beneficiary passes away before you or is unable to accept the inheritance. For instance, you may name your children as contingent beneficiaries if your spouse cannot inherit your estate.

Designating a contingent beneficiary is a good idea. It ensures your assets don’t end up in probate if the primary beneficiary can’t receive them. 

Revocable vs. Irrevocable beneficiary

Beneficiaries fall into one of two categories:

• A revocable beneficiary means you can change or remove a beneficiary at any time. For example, if you originally named your brother as the beneficiary of your will, but later decided to update it to your new spouse, you could do so. Most beneficiaries in wills and accounts are revocable.
• An irrevocable beneficiary is someone you name to receive the money from a life insurance policy or certain financial accounts. Once named, this person or group cannot be changed without their consent. The irrevocable beneficiary designation is less common but may be used in certain legal or financial agreements (e.g., divorce settlements or business contracts). It provides security for the beneficiary but reduces your flexibility. 

   

Why is it important to name a beneficiary?

Naming a beneficiary ensures your wishes are respected when you can no longer voice them. Without one, your assets may not go where you intended and can wind up tangled in a lengthy, costly probate process. This can cause uncertainty among your family members and even lead to disputes.

A properly named beneficiary helps:

• Speed and simplify the transfer of your assets
• Eliminate confusion and family disagreements
• Reduce probate costs and save time
• Provide financial stability for those you care about
• Protect your legacy 

   

What happens if you don’t name a beneficiary

If you don’t name a beneficiary, the decision of how your assets are distributed falls to the court system. Your estate will go through probate, where a judge decides who inherits according to state laws. This process can take months (sometimes years) and cause unnecessary headaches for those you leave behind. It can also get quite costly. Worse, your assets may not end up with the people or causes you care about most. 

How do I name a beneficiary? 

The process of naming or changing a beneficiary is usually straightforward, but it’s important to do it carefully.&

Start by reviewing your will and financial accounts to see if beneficiaries are listed. If not, contact the institution (e.g., bank, insurance company, retirement account provider) or your estate planning attorney to add them. In many cases, you can update beneficiaries through an institution’s website.  

To add or change a beneficiary, you will need their personal details. Though different accounts have varying requirements, it’s good to have the following information on hand:

• Full legal name of the beneficiary
• Relationship to you (e.g., spouse, child, friend, charity) 

   

• Date of birth (or founding date if it’s an organization)
• Social Security number or Tax ID
• Current address and contact information
• Percentage or portion of the asset you want them to receive (if naming more than one)  

   

Who should you name as a beneficiary?

Beneficiaries can be anyone important to you: a spouse or partner, children, grandchildren, siblings, friends, or organizations. Many people also divide assets among multiple beneficiaries, specifying percentages for each. 

When choosing a beneficiary, consider: 

• Who relies on you financially
• Who you want to support after you’re gone
• Any pets that will need care when you’re gone
• How family dynamics might be affected
• What charities you want to continue to support

You should also think about the age and financial situation of the people you want to name as beneficiaries. As mentioned above, for heirs under 18 who cannot inherit assets directly, it may be best to set up a trust to manage the money until they’re old enough to handle it themselves. 

Other places to name a beneficiary

Beneficiaries aren’t only for wills—they can also be listed on specific accounts, often with a simple form. Common accounts with a beneficiary include:

• Life insurance policies: This is one of the most common places to designate a beneficiary.
• Financial accounts: You can name beneficiaries for most types of financial accounts. For checking and savings accounts, certificates of deposit (CDs), and money market accounts, this is called a “payable-on-death” (POD) designation. For brokerage or investment accounts, mutual funds, and certain other assets, it’s typically called a “transfer-on-death” (TOD) designation.
• Retirement accounts: IRAs, 401(k)s, and pensions typically allow you to name beneficiaries.
• Annuities and similar products: You can arrange for these assets to go directly to a person of your choosing when you pass.

Make it a point to review your beneficiary designations regularly—especially after major life events like marriage, divorce, or the birth of a child. 

Frequently asked questions (FAQ)

Can you have more than one beneficiary on a will?
Yes. You can divide assets among multiple beneficiaries, either evenly or by specific percentages. For example, you might leave 50% to a spouse and 25% to each of your two children.

Can you change your will beneficiary?
In most cases, yes. Beneficiaries are usually revocable, meaning you can update them at any time. The exception is if you’ve named an irrevocable beneficiary, which requires that person’s consent to change.

Do trusts have beneficiaries?
Yes. A trust lets you decide how and when your beneficiaries receive money. With this type of legal vehicle, a trustee manages the assets and distributes funds according to your exact instructions. For example, you can spread payments out over time, delay access until a child reaches a certain age or milestone, or require the funds be used for specific purposes (e.g., education or medical expenses). A trust can be especially helpful in avoiding probate and providing long-term support for family members. 

Can I make a will without a lawyer?
Yes. In almost every U.S. state, a will is legally binding if it meets the basic state requirements. As long as you are at least 18 and of sound mind, you don’t need a lawyer to create one. Learn how to make a will without a lawyer or check out the best online will makers. 

A simple step with lasting impact   

Naming a beneficiary is one of the most vital tasks on your estate planning checklist. If you haven’t already, take the time to review your will and financial accounts today. A few small steps now can eliminate hassle for those you care about and make a big difference for their future.

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