An Estate Planning Horror Story: Not Updating Beneficiaries
When people think about estate planning, they usually think about wills or trusts. There’s another part that’s just as important—and often forgotten: beneficiary designations.
These are the names listed on life insurance policies, retirement accounts, and some bank accounts. Whoever is listed as the beneficiary will get the money, no matter what your will says. If you forget to update those names after a divorce or remarriage, it can lead to a nightmare.
A Cautionary Tale
Anna and David married in 2005. Over the years, David built a successful consulting business and accumulated retirement accounts, a pension, and a life insurance policy. When setting up his accounts, David naturally named Anna as the primary beneficiary on his life insurance and retirement accounts.
In 2016, their marriage ended in a bitter divorce. The divorce decree addressed many issues—division of assets, alimony, custody—but it never touched the beneficiary designations. David assumed that because the decree divided “all matrimonial assets,” Anna would no longer benefit. However, he never took the time to actually change those beneficiary forms.
In 2018, David remarried, this time to Brenda. He and Brenda bought a home and blended their families. It never occurred to David to revisit his beneficiary forms.
Then, tragedy struck: in early 2025, David died unexpectedly. Brenda believed that his life insurance proceeds and retirement accounts would go to her, per what he had told her and what was written in his will. Instead, she was shocked to learn:
-
The insurance company insisted on paying Anna, the ex-wife, because she was still the named beneficiary.
-
The retirement account also passed directly to Anna, bypassing the will and the probate process.
-
Brenda, despite being the current spouse and intended heir, had no legal claim to those accounts under the beneficiary designations.
-
Even though David’s will left “all my assets to my spouse,” that language was powerless to override the beneficiary contracts.
Brenda was left bearing funeral costs, mortgage obligations, and ongoing living expenses—while Anna received a windfall.
Why This Happens
In Minnesota, beneficiary designations usually override your will or trust. That means, if you forget to update them, your money may end up with the wrong person.
Minnesota does have a “revocation on divorce” law, which often removes an ex-spouse automatically. But:
-
It doesn’t apply in every case.
-
It doesn’t help if you remarry and never update your forms.
-
Some retirement or pension plans have special rules.
How to Protect Your Loved Ones
The good news? This problem is very easy to avoid.
-
Check your beneficiaries after every major life change. Marriage, divorce, new children, or a death in the family are all times to update your forms.
-
List backup beneficiaries. That way, if your first choice can’t inherit, the money goes where you want it.
-
Coordinate with your will or trust. Make sure everything matches.
-
Get legal guidance. An estate planning attorney can make sure nothing slips through the cracks.
