How to Update Beneficiaries of IRAs and 401(k)s

If you have an IRA or 401(k), then you'll need to update the designated beneficiaries of your account to coincide with the provisions of your Revocable Living Trust. This can be accomplished as follows:

1. Consult With Your Attorney on Who Should be Named as Your Primary and Contingent Beneficiaries – While there are some general rules that can be followed when naming beneficiaries of an IRA or 401(k), only your attorney can properly advise you on who to name in your particular situation. Your selection of beneficiaries for an IRA or 401(k) is much more complicated then selecting beneficiaries for life insurance because of the built in income tax consequences for IRAs and 401(k)s, so I can't emphasize enough how important it is for you to consult with your attorney first.
   
   
2. Contact Your Account Custodian to Obtain the Proper Forms – Before calling a company, check out its website because today many companies have change of beneficiary forms available online. Some companies will even allow you to update your beneficiaries online, while others will allow you to download the appropriate forms, fill them out and then mail them in. If your company doesn’t have its forms online, call and request the proper change of beneficiary forms.
   
   
3. Complete and Return All Required Forms and Documents – Once you've consulted with your attorney, fill out the forms and include all of the required information, or the forms will be rejected and returned to you for proper completion. Hint - if your beneficiary selection is complicated, then ask your attorney to complete the form.
   
   
   • When naming individuals as beneficiaries, information requested will generally include their legal name, mailing address, date of birth, Social Security Number and relationship to you.
     
     
   • When naming AB Trusts as beneficiaries, you’ll need to provide the specific name of each trust share created for the benefit of your spouse. An example of how to designate AB Trusts as beneficiaries is as follows:
     
     

     To the B Trust, and once fully funded to the A Trust, each created as a separate trust share under the John Doe Living Trust dated January 1, 2008, and any amendments thereto, for the benefit of my spouse, Mary Doe

   • If you're naming the separate trust share created for a non-spouse beneficiary under the terms of your Revocable Living Trust, then here's an example of how to designate the separate trust share:
     
     

     To the Susan Doe Trust, created as a separate trust share under the terms of the John Doe Living Trust dated January 1, 2008, and any amendments thereto

   Finally, be sure that if you're naming multiple primary or contingent beneficiaries that the percentages you choose add up to 100%.

4. Return the Required Forms and Documents to Your Custodian – Mail your completed forms and all requested documentation (such as a copy of your trust agreement) to the address provided by your Custodian. Some companies will even include a prepaid, self-addressed envelope with their forms.
   
   
5. Place Verification Documentation with Your Trust Agreement – Most companies will send you a letter or email confirming that your change of beneficiary has been received and accepted. Place this documentation with your trust agreement so that your successor trustees will know who the beneficiaries of your account are and how to contact the appropriate companies. If you don’t hear anything within 30 days, be sure to call and inquire about the status of your request since it may have gotten lost in the mail or on someone’s desk.