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A beneficiary designation beats a will: however complete the will, an unchanged 401(k) pays out the old way
This is the most easily missed item in post-wedding finances, and the one with the most direct consequences. Its logic also runs against most people's intuition.
A beneficiary designation beats a will
Your will might say "everything to my spouse," but the beneficiary field on your life insurance policy still names your mother.the money goes to your mother.
Because assets like these pass by contractual beneficiary designation, outside the process a will governs. A will covers the property that has no designated beneficiary.
So writing a will (see item 57 of the checklist) and updating beneficiaries are two separate jobs, both requiredAnd updating your beneficiary is actually more urgent, because it needs no lawyer and takes just five minutes.
Who's on a pre-marriage policy
Usually a parent. You bought the policy before you were married, and at that point a parent was the natural choice.
If you don't change it after the wedding, that field stays as it is. And most people have no memory of what they put there.
The list to update
- Life insurance
- 401(k)
- IRA
- Employer group coverage (including group life, plenty of people don't know their employer insures them)
- Auto insurance
- Homeowner's insurance
Since you're going into the company HR system anyway, do this alongside the name change, the W-4 and adding your spouse to coverage (see item 17 of the checklist).
401(k) has one special rule
From the IRS:
"Most plans require a married participant to obtain his or her spouse's written consent to change beneficiaries and/or the form in which the plan will pay out benefits."
In other words, if a married person wants to name someone other than their spouse as the 401(k) beneficiary, most plans require the spouse's written consent.
Two details worth noting:
- The text says "Most plans"But that is not all, as your actual situation still depends on your specific plan document.
- A spousal waiver usually also has to be witnessed by a notary or a plan representative, not merely signed
The existence of this rule tells you how seriously the law takes a spouse's interest in retirement assets.
Source: IRS: Retirement topics: Getting married
When you might want someone other than your spouse
Not everyone should move every beneficiary to their spouse. Reasonable exceptions:
- Children from a prior marriageIt is mainly about making sure they receive a share.
- Supporting a parent
- A remarriage where both parties have their own assets
These situations need more formal handling: beneficiary designations + a will + (where warranted) a prenuptial agreement (see item 72 of the checklist), all three consistent with each other rather than in conflict.
Keep a record afterwards
Once you have updated a beneficiary, save the confirmation letter or a screenshot. Nobody will periodically remind you to check this, and by the time it goes wrong, you will no longer be here. Leaving a record creates a trail for your family.
Review it every few years, or at every major life change (a child, a new job, a divorce).
In one line
Beneficiary designations beat the will; a pre-marriage policy probably still names a parent, it takes five minutes to fix, and unfixed your spouse gets nothing.