The Beneficiary-Designation Audit: The Highest-ROI Estate-Planning Task in America

Research date: 2026-04-21 Audience: US individuals and families; primary initial-state focus VA / WV / AL (fornax scope). Legal posture: Educational-only. Nothing below is legal advice. fornax is not a law firm and no attorney-client relationship is created by reading this document. The mechanics here are general US federal and state law as of April 2026 and change frequently. Confirm specifics with counsel licensed in your state before relying on any of it.

Part 1: Why this matters

Most Americans believe their will controls what happens to their money when they die. For a large and growing share of the average family's net worth, it simply does not.

A 2022 will that leaves "everything to my spouse" cannot reach a 2015 401(k) beneficiary form still naming an ex-spouse. The plan administrator sends the check to whoever is on the form. The will is irrelevant to that account.

This failure mode is the single most common estate-planning disaster in the United States:

A typical middle-class US family has 8 to 15 separately-designated accounts: the current 401(k), one or more rollover IRAs from old jobs, a Roth IRA, a brokerage TOD form, two or three POD bank accounts, two life-insurance policies, an HSA, a 529 for each child, and sometimes a pension.
Nearly every widely-reported estate horror story — ex-spouse inheriting a multi-million-dollar 401(k), a deceased parent still listed as a contingent, an adult child with a disability losing SSI/Medicaid because an IRA landed in their name outright — traces back to an un-audited beneficiary designation.
Unlike most estate-planning tasks, this one costs nothing. Every plan administrator, custodian, and insurer provides an online beneficiary-change form. The audit can be done in a weekend.

The core legal fact: beneficiary designations on non-probate assets override the will. A named beneficiary on a 401(k), IRA, life-insurance policy, TOD brokerage account, or POD bank account takes precedence over every word of a will or trust. See Egelhoff v. Egelhoff, 532 U.S. 141 (2001); Kennedy v. Plan Administrator for DuPont Sav. & Inv. Plan, 555 U.S. 285 (2009).

Put bluntly: if a person has never done a beneficiary audit, their estate plan is partly or mostly fictional regardless of how nice their will is.

This guide walks through the mechanics, the traps, and a 10-step audit playbook. It is DIY-doable for most readers. When it is not — blended families, large retirement balances with trust-as-beneficiary planning, non-citizen spouses, special-needs beneficiaries — the guide flags the bridge-to-pro moment.

Part 2: The legal structure — probate vs. non-probate

Probate assets

"Probate" assets are the ones the will controls. The executor files the will in the decedent's home county, the court supervises administration, and the executor distributes assets according to the will. Real estate titled solely in the decedent's name, tangible personal property, solo bank accounts with no POD designation, and solo brokerage accounts with no TOD designation are all probate.

Non-probate assets

Non-probate assets pass outside the will, directly to a named beneficiary or surviving co-owner, by operation of contract or by statute. The plan administrator or custodian transfers the asset based on the form on file at the moment of death. The probate court has no role.

Non-probate transfers include:

Beneficiary-designated retirement accounts — 401(k), 403(b), 457(b), TSP, all IRAs.
Life-insurance death benefits — contract-based designation.
Annuity death benefits — contract-based designation.
Joint accounts with right of survivorship (JTWROS) — title-based; passes automatically to surviving joint owner.
Tenancy by the entirety (TBE) — a specialized JTWROS for married couples, available in VA and WV but not AL (Ala. Code recognizes only ordinary joint tenancy; TBE abolished).
TOD (transfer-on-death) brokerage accounts — form-based designation at the custodian.
TOD real estate deeds — recorded deed naming a transfer-on-death beneficiary. Available in VA and WV; not available in AL.
POD (payable-on-death) bank accounts — form-based designation at the bank.
Assets titled in a revocable living trust — pass under the trust's terms, not the will (though the "pour-over will" may dovetail).

The primary statutory framework for non-probate transfers is Uniform Probate Code Article VI, §§ 6-101 through 6-311 — "Nonprobate Transfers on Death." The UPC establishes that these transfers are effective outside the probate process and generally cannot be defeated by the will's residuary clause.

Why this distinction dominates estate planning

For many middle-class and upper-middle-class American families, the majority of household wealth sits in non-probate assets:

Retirement accounts are usually the single largest asset class for people age 45+.
The personal residence is often JTWROS with a spouse.
Life insurance death benefits are contract-based.
Bank and brokerage accounts increasingly default to POD/TOD at account opening.

A well-drafted will that does not coordinate with the beneficiary forms is a partial plan at best and an affirmative trap at worst.

Part 3: Full inventory — every account type with a designation

A complete audit starts with a complete inventory. The following is the full taxonomy. Most families will have at least 8 entries; many will have more.

3.1 Employer retirement plans

401(k) — ERISA-governed. Qualified Joint & Survivor Annuity (QJSA) rules apply; spouse must consent in writing to any non-spouse primary beneficiary. 29 U.S.C. § 1055.
403(b) — typically ERISA-governed (nonprofit and public-education employees); same QJSA rules.
457(b) — governmental 457(b) plans are NOT ERISA-governed; tax-exempt 457(b) plans have ERISA-like rules that vary by plan document.
Thrift Savings Plan (TSP) — federal employees and military. Not ERISA, governed by 5 U.S.C. § 8401 et seq. Has its own statutory order of precedence under 5 U.S.C. § 8424(d) if no TSP-3 form is on file: spouse → children → parents → estate → next of kin.
SIMPLE IRA (employer-sponsored) — technically an IRA; see below.
SEP-IRA (employer-sponsored) — technically an IRA; see below.

3.2 Personal retirement accounts

Traditional IRA — not ERISA; governed by IRC § 408 and state law. IRS Pub 590-A / 590-B.
Roth IRA — not ERISA; IRC § 408A.
Rollover IRA — just a traditional IRA that received a direct rollover; same rules. This is the category most-frequently-orphaned — the form from 2012 at a former employer often survives a rollover unless the receiving custodian forces a new form.
SEP-IRA — self-employed or small-business. IRC § 408(k).
SIMPLE IRA — small-employer plan. IRC § 408(p).
Inherited IRA — an IRA already received from a deceased owner. Has its own successor-beneficiary form — the person who inherits the inherited IRA next. Often forgotten.

Core IRS references: Publication 590-B (Distributions from IRAs); Publication 575 (Pension and Annuity Income).

3.3 Pension / annuity contracts

Defined-benefit pensions — private employer pensions default to a QJSA (50% joint & survivor annuity) for married participants unless both spouses sign a waiver. 29 U.S.C. § 1055.
Governmental pensions — state and federal (FERS / CSRS) have their own survivor-annuity forms; SBP (Survivor Benefit Plan) for military retirees is a separate election.
Commercial annuities — beneficiary form inside the contract; treatment varies (nonqualified annuities trigger income-tax to beneficiary on the gain portion).

3.4 Education and savings accounts

529 plan — account owner names a successor account owner (who becomes owner on current owner's death). The plan beneficiary is the student and is generally changeable at any time. Review both.
ABLE account — 26 U.S.C. § 529A. Successor designated beneficiary on death.
Coverdell ESA — beneficiary form; must be used by beneficiary age 30 absent special-needs exception.
HSA (Health Savings Account) — beneficiary form. Tax treatment on death depends on who inherits: spouse gets rollover into spouse's own HSA; non-spouse gets fully-taxable distribution with no stretch.
UTMA / UGMA custodial accounts — the account is legally the minor's; on custodian's death, the account does not change beneficiaries, but a successor custodian is named.

3.5 Insurance products

Term life — pure death benefit; beneficiary form.
Whole life / universal life / variable universal life — death benefit plus cash value; beneficiary form controls death-benefit recipient.
Long-term care hybrid (LTC rider on life or annuity) — beneficiary for the residual death benefit.
Accidental Death & Dismemberment (AD&D) — separate beneficiary form, often buried in employer-benefit paperwork; frequently forgotten.
Group life (employer) — designation form usually separate from other HR benefits.

3.6 Brokerage accounts (TOD)

All major custodians offer a TOD form: Fidelity, Schwab, Vanguard, Merrill, Morgan Stanley, Edward Jones, E*Trade, Robinhood. Account-level designations typically override any title-level implication. Statutory basis: the Uniform Transfer-on-Death Security Registration Act, adopted (with variations) in nearly every state; e.g., Va. Code § 64.2-616; W. Va. Code § 36-10-1; Ala. Code § 8-6-140.

3.7 Banking (POD)

Checking, savings, money-market, and CDs all accept a POD beneficiary. Each state has its own Multi-Party Account Act (a variant of UPC Article VI, Part 2) that governs the mechanics:

Virginia: Va. Code § 6.2-604 through § 6.2-621 (Virginia Multiple-Party Accounts Act).
West Virginia: W. Va. Code § 31A-4-33 (POD accounts at state banks).
Alabama: Ala. Code § 5-5A-41 (POD and multiple-party accounts).

3.8 Real property — TOD deeds

The Uniform Real Property Transfer on Death Act (URPTODA) permits a landowner to record a deed that transfers real estate at death without probate.

Virginia: adopted 2013 at Va. Code § 64.2-621 et seq. (the "Uniform Real Property Transfer on Death Act"). Widely used.
West Virginia: adopted 2023 at W. Va. Code § 36-12-1 et seq. — still very under-known among WV attorneys and title agents.
Alabama: did NOT adopt URPTODA. AL residents who want non-probate real-estate transfer must use other tools — JTWROS, TBE (not available in AL — abolished), LLC title, or a revocable living trust.

3.9 Business interests

Operating-agreement or shareholder-agreement provisions often control transfer of LLC membership interests or closely-held stock on death. These are not "beneficiary designations" in the common form-based sense, but they function similarly and must be audited alongside the rest.

Part 4: Primary vs. contingent — why contingent matters

Every designation form offers at least two layers:

Primary beneficiary — receives the asset on the owner's death.
Contingent beneficiary — receives the asset only if every primary beneficiary has predeceased, disclaimed, or is otherwise disqualified.

Contingent beneficiaries are the single most overlooked element of the audit. The mistake pattern is:

Owner names spouse as primary.
Owner leaves contingent blank.
Spouse predeceases owner (or dies simultaneously).
Asset has no valid beneficiary.
Asset falls to the owner's estate by default — dropping into probate, paying estate creditors, and — critically for retirement accounts — losing the ability to be rolled to an inherited IRA by a designated beneficiary, because the estate is not a "designated beneficiary" under Treas. Reg. § 1.401(a)(9)-4.

For a retirement account, estate-as-default-beneficiary triggers the five-year rule (pre-SECURE) or full distribution within the decedent's remaining RMD schedule (post-SECURE), causing a compressed tax bill that often destroys 20–40% of the account value in a single tax year.

Rule of thumb: never leave a contingent beneficiary blank. At minimum, list "my then-living descendants, per stirpes" as a catchall.

Part 5: Per stirpes vs. per capita

When multiple beneficiaries are named, the form usually asks how a predeceased beneficiary's share is handled.

Per stirpes (by root, by representation)

A predeceased beneficiary's share passes to that beneficiary's descendants.

Example: Parent names three children, per stirpes. Child B predeceases Parent, leaving two grandchildren. At Parent's death: Child A takes 1/3, Child C takes 1/3, and each grandchild takes 1/6 (Child B's 1/3 split between them).

Per capita (by head)

Surviving co-beneficiaries split equally; a predeceased beneficiary's share evaporates to the survivors.

Same example per capita: Child A takes 1/2, Child C takes 1/2, grandchildren take nothing.

Which is the default?

Defaults vary by plan and by state. Many retirement-plan designation forms default to per capita. Many IRA custodians default to per stirpes. Some forms do not even ask. Never assume — read the form.

For most multi-child families with grandchildren, per stirpes is the usual intent and it must be affirmatively selected on the form. For families where a predeceased child's descendants have already been independently provided for (e.g., life insurance payable to them separately), per capita may be correct. The decision is a conscious one, not a default.

State intestacy law usually follows per-stirpes-with-representation: Va. Code § 64.2-202; W. Va. Code § 42-1-3; Ala. Code § 43-8-42.

Part 6: Minor beneficiaries and the UTMA / UGMA structure

A minor cannot directly receive a beneficiary distribution. If the form names a minor and no custodian, the plan administrator must involve a probate court to appoint a conservator or guardian-of-the-estate — a costly, slow, and privacy-destroying process.

UTMA (Uniform Transfers to Minors Act)

UTMA allows a beneficiary form to name a custodian who holds the asset for the minor until the age of termination. The proper form-language pattern is roughly:

"[Custodian Name] as custodian for [Minor Name] under the [State] Uniform Transfers to Minors Act, to age [X]."

Age of termination by state

Virginia: Va. Code § 64.2-1900 et seq. Default age 18; may be extended to 21 with explicit language in the custodial designation. For transfers by gift or will, custodianship may continue to age 21.
West Virginia: W. Va. Code § 36-7-1 et seq. (West Virginia Uniform Transfers to Minors Act). Default age 21 for most transfer types.
Alabama: Ala. Code § 19-1A-1 et seq. (Alabama Uniform Transfers to Minors Act). Age 21 default.

UGMA (older version) vs. UTMA

Most states have replaced UGMA with UTMA; the difference is that UTMA allows more asset types (including real estate and intellectual property) and typically higher termination ages. If a form or account uses the older UGMA phrasing, modernize at renewal.

Alternatives to UTMA for larger sums

When the expected amount is large (say, $100k+), UTMA termination at age 18 or 21 is a poor fit — receiving that much unrestricted at the threshold of adulthood often produces bad outcomes. Better options:

Trust as beneficiary — see Part 7. The trust can distribute gradually, condition on milestones, and preserve retirement-account mechanics.
529 plan — for education-earmarked funds.
ABLE account — for special-needs beneficiaries (see Part 15).

Part 7: Trust as beneficiary — see-through trust mechanics

Naming a trust as the beneficiary of a retirement account is a specialized topic. If done correctly, the trust receives the asset and distributes it according to the trust's terms — preserving control over timing, amount, and tax-efficiency. If done incorrectly, the IRS refuses to "look through" the trust to identify designated beneficiaries, and the account becomes subject to punitive accelerated-distribution rules.

The "see-through trust" requirements

Under Treas. Reg. § 1.401(a)(9)-4, a trust can be a "see-through" (look-through) trust — treated as if its beneficiaries were directly designated — only if:

The trust is valid under state law.
The trust is irrevocable (or becomes irrevocable at the owner's death).
The beneficiaries of the trust are identifiable.
The trust instrument (or a certification of trust) is delivered to the plan administrator by October 31 of the year following the year of the owner's death.

If these four requirements are met, the IRS looks through to the trust beneficiaries. If not, the trust is an "entity" beneficiary (not a "designated" beneficiary), and the retirement account is distributed under rules much harsher than the 10-year rule.

Conduit trust vs. accumulation trust

Conduit trust: any retirement-account distribution received by the trust is immediately passed out to the named individual beneficiary. The IRS looks through to that single individual for RMD purposes.

Simpler drafting.
Avoids trust-level income tax (trust tax brackets compress aggressively — the 37% bracket starts at $15,200 of income in 2024).
Downside: once the RMD is passed out, the beneficiary has it outright, so creditor- and divorce-protection are lost.

Accumulation trust: distributions can be retained inside the trust. For SECURE-Act purposes, all current AND potential remainder beneficiaries must be identified and evaluated; the "oldest beneficiary" generally controls the distribution schedule.

Preserves creditor/divorce protection.
Taxed at compressed trust rates on any retained income.
Drafting is more complex.

SECURE Act 2019 — Eligible Designated Beneficiaries (EDBs)

The SECURE Act of 2019 replaced the "stretch IRA" for most beneficiaries with a 10-year rule: the entire account must be distributed by the end of the 10th year after the owner's death. Stretch survives only for Eligible Designated Beneficiaries (EDBs):

Surviving spouse.
Minor child of the decedent (only until the child reaches majority; then the 10-year clock starts).
Disabled beneficiary under IRC § 72(m)(7).
Chronically ill beneficiary under IRC § 7702B(c)(2).
Beneficiary not more than 10 years younger than the decedent.

Everyone else (adult children, siblings, friends, most trusts) is a non-EDB and falls under the 10-year rule.

2024 final regs — annual RMDs inside the 10-year window

The IRS finalized regulations in July 2024 (T.D. 10001) clarifying that if the decedent died on or after their Required Beginning Date (RBD), non-EDB beneficiaries must take annual RMDs during years 1-9 of the 10-year window, not just a single distribution in year 10. This reverses what many practitioners assumed for the first several years after SECURE and has significant tax-planning consequences.

When to involve an attorney: naming a trust as beneficiary of a retirement account over approximately $500k, especially if any beneficiary is disabled, a minor, or likely to remarry. The drafting is technical and the cost of error is often six figures.

Part 8: Spousal beneficiary — special rules

A surviving spouse has more options than any other beneficiary, and those options interact with federal and state law in ways that regularly surprise families.

8.1 Spousal rollover to own IRA

A surviving spouse who inherits a retirement account can roll it into their own IRA, treating it as their own going forward. This is usually the best option for a younger surviving spouse: future RMDs are based on the surviving spouse's age (not the decedent's), and the spouse can name their own fresh beneficiaries. IRC § 408(d)(3)(C).

8.2 Inherited IRA (for spouse)

Alternatively, the surviving spouse can keep the account as an inherited IRA. This preserves the ability to take distributions before age 59½ without the 10% early-withdrawal penalty — useful if the surviving spouse is under 59½ and needs access to the funds.

8.3 QJSA — Qualified Joint & Survivor Annuity (ERISA plans)

ERISA-governed retirement plans (401(k), 403(b), defined-benefit pensions) default for married participants to a 50% joint & survivor annuity on the participant's death. The spouse is effectively the default primary beneficiary, and a non-spouse primary designation requires the spouse's written, notarized (or plan-representative-witnessed) consent. 29 U.S.C. § 1055; 26 U.S.C. § 417.

This applies to 401(k), 403(b), and ERISA pension plans.
This does NOT apply to IRAs — IRAs are non-ERISA and there is no spousal-consent requirement to name a non-spouse primary on an IRA.
This does NOT apply to the TSP in the same way — the TSP has its own rules under 5 U.S.C. § 8435 requiring spousal notice.

The spousal-consent requirement is the single most frequently ignored piece of ERISA. A 401(k) form naming "my children" as primary without a spousal waiver is invalid as to the spousal share regardless of what the form says. The spouse can step forward post-death and claim the QJSA benefit.

8.4 Community-property state complications

Nine states follow the community-property regime: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. In those states, earnings during marriage (including retirement-plan contributions) are generally community property — the non-employee spouse owns half.

Even a spouse-less designation (e.g., the decedent names their sibling as beneficiary) can be attacked by the surviving spouse as a fraudulent transfer of community assets.

Cross-border trap: a couple who earned retirement benefits while residing in a community-property state and later moved to a common-law state (like VA / WV / AL) may retain the community-property character of those specific contributions. This is known as "quasi-community property" treatment and varies by state. Review with counsel if you or your spouse worked significantly in a CP state.

Part 9: Ex-spouse — the #1 horror-story category

This section is the one most readers most urgently need.

9.1 State divorce-revocation statutes

Roughly thirty US states, following UPC § 2-804, automatically revoke an ex-spouse as a beneficiary on non-probate transfers (and under the will) upon divorce. But the statutes vary in scope:

Virginia: Va. Code § 20-111.1 — one of the strongest. Revocation applies to wills, revocable trusts, TOD accounts, POD accounts, life-insurance beneficiary designations, retirement-plan designations "to the extent permitted by federal law," and powers of attorney. The statute is self-executing — no court action required.
West Virginia: W. Va. Code § 41-1-6 (wills) and § 42-1-3a (non-probate transfers via UPC § 2-804 adoption).
Alabama: Ala. Code § 30-4-17 (wills); non-probate treatment less developed by statute.
Uniform Probate Code § 2-804 — model provision adopted by most UPC states.

9.2 THE critical federal ERISA preemption

The state divorce-revocation statutes sound reassuring. For ERISA-governed plans, they are unreliable.

In Kennedy v. Plan Administrator for DuPont Sav. & Inv. Plan, 555 U.S. 285 (2009), the Supreme Court held that an ERISA plan administrator must pay benefits to the beneficiary named on the plan form, even if state law (or a divorce decree) purports to say otherwise. ERISA's governing-document rule preempts state divorce-revocation statutes for ERISA plans.

In Egelhoff v. Egelhoff, 532 U.S. 141 (2001), the Court reached the same conclusion for a Washington state divorce-revocation statute and a life-insurance / pension plan governed by ERISA.

Practical implication: after a divorce, the ex-spouse on a 401(k), 403(b), or ERISA pension form will inherit on your death unless you affirmatively remove them. A state auto-revocation statute will not save you.

This is not academic. Kennedy itself involved a $400k savings-plan balance paid to an ex-wife twenty years after divorce, over the objection of the decedent's daughter and executor.

9.3 IRAs — state revocation generally applies

IRAs are not "employee pension benefit plans" under ERISA. State divorce-revocation statutes generally apply to IRAs directly (though the mechanics vary — some state courts require a post-divorce affirmative act; others self-execute). Verify for your state before relying on it. Va. Code § 20-111.1 explicitly reaches IRAs.

9.4 Life-insurance proceeds — mixed

Life-insurance policies issued as part of an ERISA employee-welfare-benefit plan (group life insurance at work) are ERISA-governed and subject to the Egelhoff preemption rule. Privately-purchased individual life insurance is not ERISA and is subject to state revocation law.

9.5 The fix (DO THIS after every divorce)

Immediately after divorce:

Request a new beneficiary form from every retirement-plan administrator. Submit in writing. Keep proof of receipt.
Request a new beneficiary form from every insurance policy.
Request a new TOD / POD form from every broker and bank.
Update your will and revocable trust — and note in the trust whether the ex-spouse is considered predeceased for trust purposes.
Review the divorce decree — any obligation to maintain life insurance for ex-spouse / children must be honored even after remarriage.
Confirm the plan administrator processed the new form (follow up after 30 days).

9.6 Comparison table — ERISA vs. non-ERISA divorce-revocation treatment

Plan type	ERISA-governed?	State revocation statute applies?	What to do after divorce
401(k)	Yes	No (preempted; Kennedy)	Affirmatively remove ex via new form
403(b)	Usually	No (preempted)	Affirmatively remove ex via new form
ERISA pension	Yes	No (preempted)	Affirmatively remove ex via new form
Group life at work	Yes	No (preempted; Egelhoff)	Affirmatively remove ex via new form
Governmental 457(b)	No	Varies by state	File new form AND check state law
TSP (federal)	No (federal statute)	Preempted by 5 U.S.C. § 8424(d)	File new TSP-3 form
Traditional/Roth IRA	No	Usually yes	File new form (belt + suspenders)
Individual life insurance	No	Usually yes	File new form
TOD brokerage	No	Usually yes	File new form
POD bank	No	Usually yes	File new form
Annuity	Varies	Varies	File new form

Part 10: QDRO — Qualified Domestic Relations Orders

A Qualified Domestic Relations Order (QDRO) is a court order issued as part of a divorce that directs an ERISA plan to pay a portion of the participant's benefit to the former spouse (the "alternate payee"). IRC § 414(p); 29 U.S.C. § 1056(d)(3).

Key audit points:

A QDRO creates a separate interest in the plan for the ex-spouse. That interest survives regardless of any later beneficiary designation change.
Removing an ex-spouse from a 401(k) beneficiary form does NOT undo a QDRO. A divorcing participant who later regrets a QDRO must negotiate a new court order or live with it.
Post-divorce, the plan participant may remarry and name a new spouse as beneficiary. The new spouse's rights are to the participant's remaining interest, not to the alternate-payee's QDRO-carved share.
The QDRO must be pre-qualified by the plan administrator to be effective.

A post-divorce audit should include confirming: (a) was a QDRO intended and drafted; (b) did the plan administrator accept it; and (c) does the current beneficiary form correctly reflect the remaining (non-QDRO) balance.

Part 11: Disclaimers — IRC § 2518 qualified disclaimers

A disclaimer is a beneficiary's affirmative refusal to accept an inheritance. Done correctly, the disclaimed property passes as if the disclaimant predeceased the decedent — to the contingent beneficiary or to the next-in-line heir under the will or intestacy.

Requirements for a "qualified disclaimer" under IRC § 2518:

In writing.
Delivered within nine months of the later of (a) the transfer creating the interest, or (b) the disclaimant's 21st birthday.
The disclaimant has not accepted the property or any benefits from it.
The property passes without direction from the disclaimant.
The disclaimant may not disclaim to themselves.

Practical uses in a beneficiary-designation audit:

Estate-tax planning. Surviving spouse disclaims a portion of an IRA to fund a bypass trust for the children, using the decedent's federal exclusion rather than wasting it.
Medicaid eligibility. An adult child receiving an inheritance they cannot use without losing means-tested benefits can disclaim — but disclaimers in the Medicaid context are scrutinized. See the treatment of disclaimers as transfers for eligibility purposes in the SSA/Medicaid manuals; disclaiming an asset a Medicaid applicant would otherwise receive is treated as an uncompensated transfer in most states.
Creditor avoidance. A beneficiary in bankruptcy proceedings in some jurisdictions may disclaim an inheritance to keep it from creditors (though Drye v. United States, 528 U.S. 49 (1999), holds that disclaimers do not defeat a federal tax lien).

Nine-month clock is jurisdictional. It cannot be extended. A post-audit review should note any anticipated inheritance and pre-plan the disclaimer strategy.

Part 12: Community-property considerations

As noted in Part 8, nine states follow the community-property regime. Most fornax users are common-law residents (VA, WV, AL), but the cross-border trap matters:

A couple residing in Texas for fifteen years, building a 401(k) there, then moving to Virginia, may retain community-property character in the TX-earned portion of that 401(k).
A Virginia resident whose spouse works remotely for a California employer may have community-property exposure in the CA-earned share.

For affected families, the beneficiary form is not the only relevant document — the marital-property characterization of the underlying asset can entitle the surviving spouse to a share regardless of what the designation says.

IRS Pub 555 (Community Property)

Part 13: Non-citizen spouse — QDOT and gift-tax rules

A US citizen's spouse who is not a US citizen is not entitled to the unlimited marital deduction for estate-tax purposes. Transfers at death to a non-citizen spouse are subject to estate tax unless routed through a Qualified Domestic Trust (QDOT) under IRC § 2056A.

QDOT requirement: at least one trustee must be a US citizen or US domestic corporation; US estate tax is collected on principal distributions from the QDOT.
The QDOT preserves the marital-deduction deferral but does not eliminate the tax forever.

For lifetime transfers, the gift-tax annual exclusion for gifts to a non-citizen spouse is $185,000 for 2024 (indexed annually; $190,000 for 2025 per Rev. Proc. 2024-40). Compare to the unlimited marital deduction for gifts to a citizen spouse.

Audit implication: a non-citizen spouse named as direct beneficiary of a large retirement account triggers estate-tax inclusion with no offsetting marital deduction. Restructure via QDOT, US-citizenship planning, or alternative beneficiary before death.

Part 14: Elective share / forced share

Even where a decedent successfully passes assets outside probate via beneficiary designations, the surviving spouse usually cannot be disinherited. Every US state except Georgia gives the surviving spouse a statutory right to claim a defined share of the decedent's estate.

Augmented estate

Modern elective-share statutes (following UPC §§ 2-201 through 2-214, the 1990 Revised UPC Elective Share) define an "augmented estate" that includes non-probate transfers — joint accounts, revocable-trust assets, transfers within a lookback period, and in some states, retirement accounts and life insurance. This defeats the most common attempt to disinherit a spouse via beneficiary designation.

State specifics

Virginia: Va. Code § 64.2-308.3 through § 64.2-308.13 — surviving spouse may claim 50% of augmented estate (for marriages 15 years or longer; sliding scale for shorter marriages beginning at 3% at year 1, Va. Code § 64.2-308.4). Augmented estate explicitly includes non-probate transfers, POD/TOD accounts, joint accounts (as to decedent's fractional contribution), and revocable-trust assets. Retirement accounts are pulled in.
West Virginia: W. Va. Code § 42-3-1 et seq. — up to 50% sliding with marriage duration (3% at year 1 up to 50% at year 15+). Augmented estate includes non-probate transfers.
Alabama: Ala. Code § 43-8-70 — the lesser of $50,000 (as adjusted) or one-third of the estate, which is relatively modest compared to VA/WV. AL's augmented-estate concept is narrower.

Audit implication: attempting to disinherit a spouse by using beneficiary designations to route everything to children generally fails in VA and WV — the spouse can elect against the augmented estate. In AL, the modest elective-share amount makes this partial-disinheritance more feasible, though not legally clean.

Part 15: Special-needs beneficiary — SNT structure

Directly naming a beneficiary who receives means-tested public benefits (Supplemental Security Income / Medicaid) as primary on a retirement account, life-insurance policy, or other asset will disqualify that person from benefits — often losing far more than the inheritance provides (Medicaid long-term care coverage alone is $100k+/year in many states).

Supplemental / Special Needs Trusts under 42 U.S.C. § 1396p

Three principal SNT structures preserve eligibility:

(d)(4)(A) self-settled SNT (first-party / payback trust) — funded with the beneficiary's own assets (e.g., a personal-injury settlement or inheritance already received). Must be established by the beneficiary (post-2016 under the 21st Century Cures Act), parent, grandparent, guardian, or court. On death, Medicaid receives reimbursement from the remainder up to benefits paid.
(d)(4)(B) Miller trust / Qualified Income Trust — used only in "income-cap" Medicaid states (not VA, WV, or AL for most long-term-care Medicaid purposes, which use the medically-needy route; check state specifics). Holds income above the cap.
(d)(4)(C) pooled SNT — administered by a non-profit; funds commingled but accounted for separately. No payback if retained by the pool.

For estate-planning purposes, a third-party SNT (funded by the parent or relative, not the beneficiary) is usually the cleanest structure: no Medicaid payback provision, and the parent names the third-party SNT as beneficiary of the 401(k) / IRA / life insurance.

ABLE accounts (26 U.S.C. § 529A)

Authorized under the ABLE Act of 2014 for individuals whose disability onset was before age 26 (extending to age 46 under SECURE 2.0 effective 2026). Annual contribution limit $18,000 in 2024; account balance up to $100,000 does not count against the SSI $2,000 asset limit.

ABLE accounts have their own successor-designated-beneficiary form (a sibling or other eligible family member with a disability). Do not forget them in an audit.

SECURE Act interaction

A disabled or chronically ill beneficiary is an Eligible Designated Beneficiary under the SECURE Act (Part 7 above), preserving the stretch for a life-expectancy payout. A properly-drafted SNT naming such a beneficiary can function as a see-through conduit or accumulation trust and preserve the stretch on an inherited retirement account.

This is the clearest bridge-to-pro moment in this guide. Naming a disabled beneficiary improperly can cost them a lifetime of Medicaid benefits. Work with an elder-law or special-needs attorney.

Part 16: The 10-step audit playbook

This is the DIY-doable core of the guide.

Step 1 — Inventory every account with a designation

Working from Part 3 above, list every account in the household. Categories:

Employer retirement plans (current and former jobs — former-employer 401(k)s are the most commonly orphaned).
All IRAs (traditional, Roth, rollover, SEP, SIMPLE, inherited).
All life-insurance policies (term, whole, universal, group-at-work, AD&D).
All annuities.
529 plans (one per child).
ABLE accounts.
HSAs.
Coverdell ESAs.
All brokerage accounts (TOD forms).
All bank accounts (POD forms).
TOD deeds on real estate.
Pensions with survivor-annuity elections.

Write each one down. Expect 8-15 entries.

Step 2 — Pull the current designation form from each administrator

Most plans and custodians offer online self-service beneficiary review. For older plans or life-insurance policies, request a written confirmation via the administrator's "beneficiary verification" request process.

Do not rely on memory. Do not rely on the will. Pull the actual forms.

Step 3 — List primary and contingent for each

Record the current primary, contingent, and allocation percentages for each account. If contingent is blank, flag it red.

Step 4 — Compare against current will, trust, and stated intent

Lay out a one-page chart: account, primary, contingent, intended outcome. Highlight any mismatch between what the designation form says and what the will / stated intent says. The designation form wins — so the will must be brought into alignment with it, or the form changed.

Step 5 — Flag every account where something is wrong

Common red flags:

Primary is an ex-spouse (especially on 401(k) / 403(b) — see Part 9).
Primary is a deceased person (parent, sibling, friend who predeceased).
Primary is a child who is now an adult and was named as a minor but without UTMA language (check — may need new form).
Primary is a minor with no custodian named.
Contingent is blank.
Primary is a single person and the contingent is "estate" rather than a named person.
Primary is a trust, but the trust has not been reviewed since drafting.
Allocations don't add to 100%.
Form is from before a major life event (marriage, divorce, birth, death of named beneficiary).

Step 6 — Decide per stirpes vs. per capita on each multi-beneficiary form

See Part 5. Choose deliberately. Update the form if the current default does not match intent.

Step 7 — For minor beneficiaries, add UTMA custodian language or name a trust

See Part 6. Blank minors get guardianship-of-the-estate court proceedings on the owner's death. Do not leave this unaddressed.

Step 8 — For large retirement accounts ($500k+), consider see-through trust with EDB/non-EDB analysis

See Part 7. This is usually the bridge-to-pro moment. Talk to an estate attorney familiar with the final 2024 SECURE regs.

Step 9 — Coordinate with overall estate plan

The beneficiary forms and the will should tell one coherent story. Common coordination traps:

The will leaves "25% of my estate to each of four children." The 401(k) (the largest asset) names only the spouse. The spouse gets essentially everything; the children share only the minor probate residuary.
The revocable trust has an elaborate distribution scheme. The TOD form on the brokerage account names two of the four children directly. Those two take the brokerage account outside the trust, breaking the allocation.
An advance-directive plan relies on the spouse being the default; a non-spouse designation on the pension defeats this.

Align the two layers.

Step 10 — Re-audit every 3 years AND after every major life event

Set a calendar reminder. Also re-audit:

Marriage
Divorce
Birth (including adoption)
Death of any named beneficiary
Job change (new 401(k); old one needs designation too, until rolled over)
Move to community-property state
Disability diagnosis (self or beneficiary)
Remarriage
Significant wealth change (business sale, inheritance, settlement)

Part 17: Common life events that invalidate old designations

Event	What to update
Marriage	Spouse typically becomes primary on retirement accounts, life insurance, banking (review ERISA spousal-consent rules).
Divorce	Affirmatively remove ex-spouse from every ERISA plan. Update IRAs, life insurance, TOD/POD, 529 successor owner. Review QDRO.
Death of primary beneficiary	Elevate contingent; name new contingent.
Birth of child	Add to beneficiary tree (directly via UTMA or via trust); update 529 successor.
Adoption	Update designations to include adopted child explicitly (some older forms limit to "natural children").
Move to community-property state	Review CP claim of spouse; verify state-law default.
New job	New 401(k) at new employer needs its own designation — old form did not carry. Old 401(k) at former employer still has its own form.
Disability diagnosis (beneficiary)	Convert direct designation to SNT; review ABLE account.
Remarriage	Review blended-family conflicts; update will, trust, and designations together.
Grandparent / parent death	Remove from any designations naming them as contingent.
Business sale / major liquidity event	Larger accounts trigger trust-as-beneficiary analysis.

Part 18: VA / WV / AL state-specific summary card

Virginia

Divorce revocation: Va. Code § 20-111.1 — strong, self-executing across wills AND non-probate transfers, "to the extent permitted by federal law" (ERISA preemption still applies to 401(k)/403(b) — update those manually).
TOD deed: yes, Va. Code § 64.2-621 et seq. (URPTODA, adopted 2013).
Elective share: Va. Code § 64.2-308.3 through § 64.2-308.13 — sliding scale to 50% of augmented estate (15-year marriage threshold). Augmented estate includes non-probate transfers.
POD / multiple-party accounts: Va. Code § 6.2-604 et seq.
UTMA age: 18-21 (Va. Code § 64.2-1900 et seq.).
Community property: No — common-law marital-property state.
TBE: Yes, available for married couples.

West Virginia

Divorce revocation: W. Va. Code § 41-1-6 (wills) and § 42-1-3a (non-probate transfers via UPC § 2-804 adoption).
TOD deed: yes, W. Va. Code § 36-12 (adopted 2023 — very under-known in the WV title bar).
Elective share: W. Va. Code § 42-3-1 et seq. — sliding scale to 50% of augmented estate at 15-year marriage.
POD / multiple-party accounts: W. Va. Code § 31A-4-33.
UTMA age: 21 default (W. Va. Code § 36-7-1 et seq.).
Community property: No — common-law.
TBE: Yes.

Alabama

Divorce revocation: Ala. Code § 30-4-17 (wills); non-probate revocation less developed by statute.
TOD deed: NO — Alabama did not adopt URPTODA. AL residents must use JTWROS (TBE abolished in AL), LLC title, or revocable living trust for non-probate real-estate transfer.
Elective share: Ala. Code § 43-8-70 — lesser of $50,000 (as adjusted) or one-third. Smallest of the three.
POD / multiple-party accounts: Ala. Code § 5-5A-41.
UTMA age: 21 default (Ala. Code § 19-1A).
Community property: No — common-law.
TBE: NO — abolished in Alabama. Ordinary JTWROS only.

Part 19: When to bridge to a pro

Do NOT attempt DIY beneficiary planning in the following situations. Engage an estate-planning attorney, and for retirement-plan matters, one familiar with the 2024 final SECURE regs.

Large retirement accounts + trust-as-beneficiary discussion. See-through trust drafting, conduit vs. accumulation, and EDB analysis all require tight compliance with Treas. Reg. § 1.401(a)(9)-4.
Blended families. First-marriage children + second-marriage spouse + step-children is the most litigated estate-planning scenario in US practice.
Non-citizen spouse. QDOT drafting is technical; annual-exclusion limits are specific.
Special-needs beneficiary. SNT and ABLE integration requires deep knowledge of SSI / Medicaid interaction. Mistakes cost a lifetime of benefits.
Owner-operator business interest. Succession of closely-held business equity interacts with operating-agreement transfer restrictions, QTIP planning, buy-sell agreements, and § 6166 installment payment of estate tax.
Cross-border issues. Foreign real estate, foreign beneficiaries, dual-citizenship considerations, community-property-state history.
Very large estates (above the federal exclusion, $13.99M individual / $27.98M couple for 2025, scheduled to sunset at the end of 2025 absent further legislation). Estate-tax planning interacts with beneficiary designations in non-obvious ways.
Anticipated or ongoing divorce / separation. Timing of designation changes in relation to filing date affects validity.
Significant creditor exposure. Directly-named beneficiaries lose the creditor protection available through trust structures.
Irrevocable trusts already in place. Modifying designations to fund existing trusts properly is a drafting exercise.

Appendix A: Non-exhaustive primary-source index

Federal statutes and regulations

IRS publications

Federal cases

SSA guidance (Medicaid/SSI interaction)

Uniform Law Commission model acts

State statutes

Virginia:

West Virginia:

Alabama:

End of research document. Educational-only. Not legal, tax, or financial advice. fornax is not a law firm. Re-verify every statutory citation against the current official source before relying on it. Statutes and regulations change; this document reflects the law as of April 2026 and will age.