You may have heard the saying, “The devil is in the details.” In estate planning, that is definitely true, especially when it comes to beneficiary designations.
Most people don’t intentionally make mistakes. Life simply moves fast. A divorce happens. A loved one dies. A child is born. You open an account when you’re single, and then years later, you’re married with a family — yet that old paperwork quietly remains unchanged.
Unfortunately, oversights in beneficiary designation, which might seem small at the time, can have heartbreaking consequences. Here are just a few real-world examples:
- Someone divorced but never updated his beneficiaries. When he died, his ex-wife inherited everything, and their children received nothing.
- A woman named a beneficiary who died before she did. Because she never listed a contingent beneficiary, her assets ended up tied up in probate, with the state determining what happened next.
- A man opened a retirement account while single and named his parents as beneficiaries. After he married, he forgot to update the form. When he died unexpectedly, his wife was stunned to learn that his assets passed to his parents instead of to her.
In each of these cases, the outcome wasn’t malicious. A detail went unattended.
When new clients begin working with us, we often discover outdated beneficiary information — and sometimes, different beneficiaries listed on different documents. One of the first things we do is carefully review and update those designations so they align with your wishes and match across all accounts. In estate planning, consistency matters.
A note about naming minors as beneficiaries
Many parents want to name their children directly as beneficiaries. However, minors generally cannot legally inherit assets outright. Here are some potential solutions:
- Name a guardian.
- Create a trust and name minor children as beneficiaries of the trust.
- Establish a Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA) account.
With UGMA or UTMA accounts, an adult custodian manages the assets until the child reaches the age of majority. That age varies by state. In Wisconsin, minors are generally considered under age 18 for beneficiary purposes, although the Wisconsin UTMA allows a custodian to manage assets until the beneficiary turns 21.
Other documents supersede your will
Many people assume their will determines who receives their assets. In reality, several types of accounts bypass a will and go directly to the beneficiary named on the account form, regardless of what your will says.
These documents include annuities, brokerage accounts, life insurance policies, retirement accounts, bank accounts with payable-on-death (POD) or transfer-on-death (TOD) designations, 529 college savings plans and certain employer-sponsored benefits.
So even if your will is current, outdated beneficiary forms can override it. If documents contradict each other, it can create confusion, delays, legal disputes — and in some cases, costly litigation that drains the estate you worked so hard to build.
Plan for taxes
Another detail people often overlook is taxes. Without proper planning, taxes can significantly reduce what your loved ones receive.
The federal estate tax applies only to large estates, and in 2026, the filing threshold is $15 million per individual. Only the portion of an estate exceeding that threshold is taxed, at a top marginal rate of 40 percent. Many estates owe nothing.
Some states impose estate taxes or inheritance taxes, although Wisconsin does not currently levy either. It’s important to understand the difference:
- Estate tax is paid by the estate before assets are distributed.
- Inheritance tax is paid by the beneficiary who receives the assets.
Rules can change. Thresholds adjust. Laws evolve. This is just one of many important reasons why it is important to work with a professional team such as ours when planning to leave an inheritance.
Estate planning is about protecting the people you love from confusion, conflict and unintended consequences. When these important details are handled carefully and proactively, your legacy will reflect your true intentions.
One of the many ways we provide value as your financial advisory team is by making sure your documents — especially your beneficiary designations — are current, aligned and coordinated. We review them regularly and update them whenever you experience a major life event, such as marriage, divorce, the birth or adoption of a child and the death of a previously named beneficiary.
