Almost 60% of Americans don’t have a last will and testament. But maybe you’re one of the people who do. You’ve done your homework, inventoried your assets, and have an up-to-date will. So your family’s taken care of, right? Not so fast. If you haven’t updated beneficiaries for your life insurance and financial accounts, keep reading. Some useful tips can help ensure that your money gets into the right hands after you’re gone.

A Quick Overview of Beneficiaries

Beneficiaries usually receive death benefits from life insurance policies. But The Balance mentions that beneficiaries aren’t limited to life insurance. Death benefits also come from stocks, annuities, and retirement accounts such as IRAs or 401(k) plans. You’d name at least one person as your beneficiary – likely your spouse or partner.

Depending on the policy or plan, you can name several primary beneficiaries and assign funds percentages to each one. You could allocate 50% to your partner and 50% to your child, for instance. You can also have contingent beneficiaries – those receiving your funds if your primaries are dead or unavailable.

Who You Can Name as Beneficiaries

You can name people, charities, or your estate as beneficiaries on insurance policies. If you’ve set up a trust, you can also choose your trustee. But it’s a little different with retirement accounts. The Employment Retirement Income Security Act governs most plans. The primary exceptions are those set up by government entities and churches. ERISA stipulates that spouses as beneficiaries must receive at least 50% of a retirement plan’s funds. Investopedia adds that minor children cannot inherit as direct beneficiaries. A guardian must oversee whatever funds they’d receive. Creating a trust for the children usually solves this problem. Funds from retirement plans go into these trusts, managed by their trustees.

Conflicts Between Beneficiaries and Your Will

What happens if your beneficiary designations are different from what’s in your will? This occurs more often than people realize, says certified financial planner Dana Anspach. It can cause headaches for the deceased’s estate executor and family. In those cases, Anspach explains, beneficiary designations supersede the will. That’s because your designations are legally binding documents.

You can see how a conflict between the two can result in major problems. Say, for instance, you want to leave most of your estate to your partner. You draw up a will to match, but you also have a 401(k) that’s several years old. When you started that account, you were still single and you named your parents as beneficiaries. If you don’t update those designations before your death, your parents will get your 401(k) instead of your partner.

Can your executor and heirs rectify this kind of problem? Maybe, but it could cost them. Even if all parties agree to honor your intentions, Anspach says, they may need to devise a workaround. Your employer, plan administrators, and financial institutions must honor whatever’s in writing. So your heirs could dump funds from your 401(k) into a new IRA, for example, and disburse the funds accordingly. But this can create hassles, including more paperwork and tax liabilities. And if all parties do not agree to a solution, your mistake could leave them fighting over your assets for years.

Doing Your Due Diligence

If you have drawn up a will, you must understand the importance of keeping it up to date. But beneficiary designations also pass money to your heirs after you’re gone. Life insurance, annuities, retirement accounts, and stocks have different rules for choosing beneficiaries. Keeping these selections current can avoid hassles, misunderstandings, added costs, and hard feelings. After all, your loved ones deserve both the resources you’ve left them and peace of mind.