# Who's Actually Getting Your Money? Test Your Beneficiary Knowledge
Most people name beneficiaries on retirement accounts and life insurance policies without understanding how these designations work. Kiplinger's quiz highlights gaps in knowledge that could cost your heirs thousands of dollars.
Beneficiary designations override your will. If you name your ex-spouse on a life insurance policy but update your will to favor your current spouse, the ex-spouse gets the money. The beneficiary form controls the payout, not your will. This matters because probate courts cannot override what the insurance company or retirement plan has on file.
Different accounts follow different rules. Traditional IRAs and 401(k)s pass to named beneficiaries outside of probate. Life insurance policies do the same. However, the rules for required minimum distributions change depending on who inherits. A surviving spouse can roll an inherited IRA into their own account and delay distributions. A non-spouse beneficiary cannot and must begin withdrawals immediately under current law.
Naming a minor as beneficiary creates problems. A child cannot legally receive a large sum of money outright. You need to name a custodian or create a trust to manage the funds. Without this structure, a court will appoint a guardian, which costs money and takes time.
Outdated beneficiaries sit on thousands of retirement and insurance accounts. People change jobs, get married, or have children and forget to update their beneficiary forms. A former employer's 401(k) with an ex-spouse listed as beneficiary will pay that ex-spouse unless you submit a new designation to the current plan administrator.
Review your beneficiary forms every three to five years. Check life insurance policies, retirement accounts, and any investment accounts that allow beneficiary designations. Contact your HR department, insurance agent, or financial institution to confirm what's currently on file. Update forms whenever your family situation changes