Much of the money that Americans have managed to save now resides in our retirement accounts, such as IRAs and 401(k) plans. IRAs alone account for more than $6.5 trillion of our collective wealth, with 401(k)s and other defined contribution plans adding another $5 trillion, according to the Federal Reserve.

What happens to those accounts when we die is of paramount importance in estate planning. Unlike our other assets, whatever might be left in them will be distributed according to our beneficiary designations rather than through our wills.

That’s not to say that having a will isn’t important, too. It will determine where most of your nonretirement assets will go. If you have minor children, it’s also where you can name their guardians, should something happen to you. You can even use it to make provisions for your pets.

The trouble with beneficiary designations is that many of us made them when we first opened our accounts and might not have revisited them in the years, or even decades, since. Your beneficiary could be a deceased parent, an ex-spouse or some relative you no longer even speak to. If you were to die, the people you'd like to see get the money, such as a current spouse or children who were born after you filled out those forms, could end up with nothing.

The lesson here, of course, is to review your beneficiary designations every year or two – or whenever you experience any major life change – and update them with the account’s custodian as needed. Often that’s as simple as filling out a form online. You can also name contingent beneficiaries, just in case your primary beneficiaries don't survive you.

Note that the beneficiary of your IRA will have some options to consider once that money is his or hers. Different rules apply to spouses than to non-spouse beneficiaries. The rules also differ according to whether the account was a traditional IRA or a Roth IRA. These provisions are explained in IRS Publication 590, “Individual Retirement Arrangements (IRAs).”

If you happen to have a traditional, defined-benefit pension at your current employer or a former one, you will face another set of estate-planning considerations, especially if you’re married. By law, your spouse is your beneficiary unless he or she waives that right in writing.

When you are ready to collect your pension, you and your spouse will have to decide whether to take it as a lump sum and roll it over into an IRA or receive it as a series of monthly payments. If you choose the latter, you’ll need to determine whether to take it as a joint-and-survivor annuity that will continue to cover your spouse if you die first, or as a single-life annuity that pays you more each month but stops when you die. By law, the joint-life annuity is generally the default option unless your spouse waives it in writing.

Depending on the rules of your particular plan, you may also be able to choose the percentages you and your spouse will each receive. By law your spouse must receive a benefit equal to at least 50 percent of your benefit. But you might be able to increase that – to 75 percent, for example – if you accept a reduced benefit. If you and your spouse are fortunate enough to have traditional pensions from both your employers, you will want to explore all the possible scenarios for maximizing your total benefits over your lifetimes.

If you're a married same-sex couple, you no doubt know that a 2013 Supreme Court ruling (United States v. Windsor) extended pension-inheritance rights, among many other rights, to you. Such couples had previously been excluded as a result of the Defense of Marriage Act of 1996, which had defined marriage as “only a legal union between one man and one woman.”

To check on your pension-plan beneficiary designations and update them if necessary, contact your employer or ex-employer’s plan administrator.

The Bottom Line

If you haven't checked your retirement-plan beneficiaries lately, put that on your to-do list and get it done as soon as you can. If you're not sure whether your beneficiary designations fit with the way your will is written, check with an attorney. If you don't have a will, you know what else to put on your list.

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