Beneficiary-designation audit

A **beneficiary designation** is the form on file with a plan administrator, insurer, or custodian that names who receives an account's value when you die. These designations are **non-probate transfers** — they pass directly to the named beneficiary and OVERRIDE whatever your will says. A 2022 will leaving "everything to spouse" cannot reach a 2015 401(k) form still naming an ex-spouse.

**Accounts with designations** (typical family has 8-15): - Employer retirement — 401(k), 403(b), 457(b), TSP, pension, SIMPLE-IRA at work, SEP-IRA at work - Personal retirement — traditional IRA, Roth IRA, rollover IRA, inherited IRA - Insurance — term / whole / UL / VUL life, annuity, AD&D, LTC hybrid - Brokerage TOD — Fidelity / Schwab / Vanguard / Merrill / Morgan Stanley - Banking POD — checking / savings / CDs (state multi-party account acts govern) - Education / savings — 529 successor, ABLE, HSA, Coverdell ESA - Real property — TOD deeds where state allows (VA § 64.2-621 adopted; WV § 36-12 adopted 2023; **AL did NOT adopt URPTODA**)

**Why ex-spouses are the #1 horror story.** Most states auto-revoke ex-spouse beneficiary designations on divorce (VA § 20-111.1 is among the strongest — revokes on BOTH wills and non-probate transfers). **But ERISA preempts state revocation statutes** for employer retirement plans. In *Kennedy v. Plan Administrator for DuPont Savings & Investment Plan*, 555 U.S. 285 (2009), the Supreme Court held that the beneficiary on file at death governs an ERISA plan — not the divorce decree, not the state statute. After divorce, you MUST affirmatively remove ex-spouse from every 401(k) / 403(b) / pension form. IRAs (non-ERISA) generally DO follow state revocation, but verify.

**Primary vs contingent.** Most failure modes are missing contingents. If primary predeceases, disclaims, or is disqualified, an account with no contingent falls into the probate estate and loses inherited-IRA mechanics.

**Per stirpes vs per capita.** Per stirpes: a predeceased beneficiary's share passes to their descendants. Per capita: survivors split equally; predeceased's descendants take nothing. Defaults vary by plan; many default to per capita, which surprises families.

**SECURE Act 10-year rule.** Non-Eligible Designated Beneficiaries (non-EDBs) of inherited retirement accounts must drain within 10 years. EDB categories (§ 401(a)(9)(E)(ii)): surviving spouse, minor child of decedent (until majority), disabled beneficiary, chronically ill, ≤10 years younger. 2024 final regs require annual RMDs within the 10 years if decedent died after their Required Beginning Date (RBD).

**See-through trust.** To preserve designated-beneficiary status when naming a trust, the trust must qualify under Treas. Reg. § 1.401(a)(9)-4 (identifiable beneficiaries, all individuals, trust document furnished to plan admin by Oct 31 of year after death). Conduit trust: RMDs distributed through. Accumulation trust: retained in trust at compressed rates.

**The 10-step audit playbook:** 1. Inventory every designated account. 2. Pull current designation form from each administrator (most have online self-service). 3. Compare primary + contingent against current will and stated intent. 4. Flag: ex-spouses, deceased persons, stale contingents, blank contingents. 5. Decide per stirpes vs per capita. 6. For minors: UTMA custodian or see-through trust. 7. For $500k+ retirement accounts: model the see-through trust vs direct payout. 8. Coordinate with overall estate plan. 9. Update after every life event (marriage, divorce, birth, death, job change, adoption, disability, remarriage). 10. Re-audit every 3 years regardless.

Tagged 🟢 — the audit itself is genuinely DIY. Updating each form is free. Bridge to a pro on trust-as-beneficiary for large retirement accounts, blended-family scenarios, and non-citizen spouses (QDOT territory). Full coverage at /learn/guides/beneficiary-designation-audit.