How to Pass Retirement Assets to Your Heirs: Estate Planning Guide

You’ve spent decades stuffing money into your 401(k), IRA, or Roth, right? You picture your kids or grandkids using that money someday maybe for a house, college for their own kids, or just a nicer life. But here’s the gut-punch a lot of people never see coming: your Will doesn’t control those accounts. Nope. One little form does the beneficiary designation. Get that form wrong (or forget about it), and all your careful planning can go straight out the window. I’ve seen it break hearts and start family fights more times than I can count.

Here are the three biggest “oops” moments I see all the time and exactly how to fix them before it’s too late.

1. Forgetting to update beneficiaries when life actually happens
   Divorce? New baby? Remarriage? Someone passes away? Those are the exact moments most people swear they’ll “take care of it later”… and then never do.

Real-life nightmare I’ve seen: Guy gets divorced, remarries, has two more kids, updates his Will perfectly… but forgets the old 401(k) from his first job still lists his ex-wife. She got every penny when he died suddenly at 58. His current wife and young kids? Zero. The retirement plan company doesn’t care what your Will or trust says they only look at that one form.
Fix: Put a recurring reminder on your phone “Check beneficiaries” every two years or any time something big happens in your family (marriage, divorce, birth, death). Takes ten minutes and saves a lifetime of regret.

1. Putting “My Estate” on the beneficiary line because it feels easier
   A ton of people think, “Eh, I’ll just name my estate and let the Will sort it out.” Huge mistake.

Here’s why it backfires:

• Your heirs lose the ability to “stretch” the IRA over their lifetimes and pay taxes slowly. Instead, the money usually has to come out (and get taxed) in just 5 years—sometimes even faster.
• Everything gets dragged through probate: slow, expensive, and public.

Fix: Name actual humans (or a properly drafted trust). Only name “estate” if your attorney has a very specific reason and explains it in plain English.

1. Naming a minor child (or grandchild) directly
   Love your 6-year-old grandson and want him to have your IRA? Awesome sentiment. Terrible execution if you put his name straight on the form.

Kids can’t own big piles of money legally. The second you die, a judge gets involved, appoints a guardian for the funds, and now your grandson’s inheritance is locked in a court-supervised account with annual fees and paperwork. Then poof on his 18th birthday he usually gets the whole pile in one check. (You know any 18-year-olds ready for a surprise six-figure windfall? Yeah, me neither.)Fix: Create a simple trust (or use the one you probably already have) and name the trust as beneficiary. You pick the trustee, you set the rules (“no money till age 25,” “use it for college first,” whatever feels right), and you keep the courts completely out of it.

Bottom line: Your Will is important, but for retirement accounts, the beneficiary form is the boss. Dig those forms out this weekend, pour a cup of coffee, and make sure they say exactly what you think they say. Your family will never know you did it—but they’ll feel the difference for the rest of their lives.