Updating Beneficiary Designations to Coordinate with Your Trust

Now that you have a trust in place, it’s time to review your beneficiary designations — and in some cases, update them so your assets end up where you intend.

Beneficiary designations control how these types of accounts transfer at your death:

• Retirement accounts (IRAs, 401(k)s, and similar)
• Life insurance policies
• Annuities
• Bank accounts with payable-on-death (POD) designations
• Investment accounts with transfer-on-death (TOD) designations

These accounts pass outside of your will and outside of your trust, which means your trust won’t control them unless you’ve named it as a beneficiary. Getting these designations right is one of the most important steps in making sure your estate plan actually works.

This is your step to complete. Updating your beneficiary designations is part of funding your trust, and it’s something only you can do. We’ll give you the information you need, but you’ll need to follow through directly with each institution.

Why This Matters

Naming your trust as a beneficiary helps ensure that these assets:

• Transfer to the trust upon your passing without requiring probate
• Are distributed with any protections or timing instructions you’ve built into your trust
• Are available to support your loved ones in a way that reflects your goals and values

Naming Your Trust as Beneficiary: The General Idea

For most accounts, naming your trust as the beneficiary is the goal. It ensures that when you die, those assets flow into your trust and are distributed according to your instructions — with whatever protections, timing, or conditions you’ve built in.

Use the full legal name of your trust exactly as it appears in your documents.

That said, not every account type is handled the same way. Some accounts have tax rules that affect whether naming your trust directly is the best move or whether naming an individual (like a spouse) first makes more sense. The sections below walk through each account type to help you consider what to do before you make any changes.

Retirement Accounts (IRAs, 401(k)s, and Similar): Read This First

Retirement accounts have special tax rules that affect how you should name beneficiaries. There’s no single right answer here. It depends on how your trust is drafted and what matters most to your family. Here’s what you need to know.

Option 1: Name your spouse as the primary beneficiary, your trust as the contingent beneficiary

This is the most common approach, and it preserves the most tax flexibility for your spouse.

When a spouse inherits a retirement account directly, they have options no one else gets: they can roll it into their own IRA, delay required minimum distributions until age 73, and stretch the tax deferral over their lifetime. Naming the trust as contingent (rather than primary) keeps those options intact.

The tradeoff: if your spouse inherits the account directly, it’s now theirs — not the trust’s. Any instructions in your trust about how the money should be managed or protected don’t apply to that account.

However, if your trust includes see-through or conduit trust language, naming the trust as the primary beneficiary may preserve similar tax advantages while keeping your trust in control. If your trust was drafted by Lester Law, this language is likely already included, which means Option 2 may be available to you without the usual tax downside. It’s worth confirming before you default to this approach.

Option 2: Name your trust as the primary beneficiary

This gives your trust full control over the retirement account at your death, which can matter if you want to protect the funds from a beneficiary’s creditors, manage distributions for a minor or someone with special needs, or ensure the money is handled according to your specific instructions.

The tradeoff: naming a trust as beneficiary can compress the tax deferral. Under the SECURE Act, most beneficiaries must fully distribute an inherited IRA within 10 years, which can mean a bigger tax bill over a shorter window.

However, if your trust includes specific language qualifying it as a “see-through” or conduit trust, your beneficiaries may still be able to take distributions over their life expectancy rather than the 10-year window. Your trust may have this language already included, but it’s worth confirming before you make any changes.

The bottom line: either approach can work. Naming your spouse first is usually the simpler, more tax-advantaged choice. Naming your trust first may make sense if control and protection matter more than tax deferral — especially if your trust has the qualifying language. When in doubt, reach out before you update a retirement account beneficiary, and loop in your financial advisor or CPA if you have a large account.

Life Insurance

You do not need to change the ownership of a life insurance policy — just the beneficiary.

For most clients, naming your trust as the primary beneficiary makes sense. It ensures the death benefit flows into your trust and is distributed according to your instructions, with whatever protections or conditions you’ve built in.

The one scenario in which naming your spouse as the primary beneficiary (and your trust as the contingent beneficiary) might make more sense is if your spouse will need immediate access to cash after your death to cover bills, mortgage payments, or final expenses before trust administration begins. A direct beneficiary designation can pay out faster than a trust distribution. If that’s a concern, talk to us about whether a direct designation or a trust designation better fits your situation.

If an insurance company asks for additional information when you name the trust as beneficiary, here’s how to answer:

• Name: Full legal name of the trust
• Date of Birth: Date the trust was signed
• Tax ID / SSN: Your Social Security number (your revocable trust does not have a separate tax ID)
• Relationship: Trust
• Percentage: 100%

Annuities

Like life insurance, you generally don’t need to change the ownership of an annuity — just the beneficiary. The same primary/contingent approach applies.

One important distinction: if your annuity is tax-deferred, do not name your trust as beneficiary without first consulting a tax professional. The rules are complex and getting it wrong can have real tax consequences. If your annuity is taxable (not tax-deferred), naming the trust as beneficiary is generally straightforward.

If you’re not sure which type of annuity you have, check with the company or your financial advisor before making changes.

Bank and Investment Accounts

For checking, savings, money market, and non-IRA investment accounts, you have two options:

Option 1 — Re-title the account in the name of your trust. This transfers full ownership now, so the account is controlled by your trust during your lifetime and at death.

Option 2 — Add a POD or TOD designation. Payable-on-death (for bank accounts) and transfer-on-death (for investment accounts) designations let you keep the account in your name during your lifetime, but direct it to your trust at death. This is often the simpler route for everyday checking and savings accounts.

For either option, use your trust’s full legal name as the destination.

Note: if you become incapacitated, a POD/TOD designation won’t help. The account is still in your name, and your trust won’t be able to manage it. Re-titling is the stronger option if incapacity planning is a priority for you.

How to Update Your Designations

1. Review your current designations.
   Log in to each account or contact your provider to see who is currently named.
   
2. Request a beneficiary change form.
   Most banks, brokers, and insurance companies have these online or through your account portal.
   
3. Use the correct trust name.
   Refer to your Funding Instructions document for the exact language.
   
4. Submit and confirm.
   Don’t assume the change went through — follow up until you have written confirmation.
   
5. Keep a copy.
   File the confirmation in the “Funding” or “Additional Documents” section of your estate planning binder.

We’re Here If You Need Us

If you’re unsure whether to name your trust as a beneficiary, how to fill out a form, or whether a specific account needs to be updated, reach out. Email us anytime or give us a call. We’d rather you ask than guess.