Reviewing your estate plan and updating the beneficiaries on your retirement accounts is important anytime you have a major life change. A last will and testament does not generally cover who will receive the benefits from your retirement accounts when you pass away, which makes review and revision all the more important when necessary.
Some of the most important times to update your retirement accounts include after a divorce, remarriage, and having children. Other examples of when you will need to revise the beneficiaries on your retirement account could be if you have designated a charity to receive your benefits and it is no longer solvent. In either case, it can be especially difficult for heirs to challenge the designation in court and recover what should be theirs.
Should you fail to designate a beneficiary altogether or that individual passes away before you do, your beneficiary may be determined by state law or the provision that governs your account. Federal regulations govern profit-sharing plans, 401(k)s, and money purchase pension plans and will automatically go to your spouse if you are married. Unless your spouse signs and notarize a document stating otherwise, no one else may be designated as a beneficiary for these types of accounts.