When creating an estate plan, naming beneficiaries might seem like the easiest step. But it’s also one of the most common areas where mistakes can lead to confusion, delays, or even costly legal battles down the road. Whether you’re in the early stages of planning or it’s been a while since you reviewed your documents, it’s important to avoid these common pitfalls—especially here in California, where probate laws and community property rules add an extra layer of complexity.
Here are the top 6 beneficiary mistakes we see—and how to avoid them:
1.Forgetting to Update Beneficiaries After Life Changes
Major life events like marriage, divorce, births, or deaths often require a beneficiary update. But many people forget to review their designations after these changes—leaving an ex-spouse listed on a retirement account or forgetting to include a new child or grandchild.
How to avoid it:
Review your estate plan and all beneficiary designations (on life insurance, retirement accounts, etc.) at least once a year and after any major life event.
2. Naming Minor Children as Direct Beneficiaries
Under California law, minors cannot legally receive inherited assets outright. If you name a child under 18 as a direct beneficiary, the court may appoint a guardian to manage those assets—which can be expensive, time-consuming, and not in line with your wishes.
How to avoid it:
Set up a trust for your minor children and name the trust as the beneficiary. That way, you can control how and when the assets are used, and avoid court involvement. Or, you can establish specific ages for your young beneficiaries to inherit their distributions. For example, each young beneficiary could inherit 20% of his/her share at 18 years old, then another 20% of his/her share at 21 years old, and the balance at 25 years old.
3. Naming Only Primary Beneficiaries (and No Alternates)
If your primary beneficiary passes away before you—or at the same time—and you haven’t named an alternate beneficiary, the asset could end up in probate.
How to avoid it:
Always name at least one alternate (or backup) beneficiary in your Trust and for every account or asset with a beneficiary designation.
4. Making Conflicting Designations
One of the most common issues we see is a mismatch between a client’s will or trust and their beneficiary designations on retirement accounts, insurance policies, or pay-on-death accounts. In California, beneficiary designations generally trump what’s written in a will or trust—meaning your assets might go to someone other than who you intended.
How to avoid it:
Work with an estate planning attorney to ensure that all beneficiary designations align with your overall estate plan.
5. Naming a Person with Special Needs Without a Trust
Leaving money directly to a person with disabilities can unintentionally disqualify them from receiving essential government benefits like SSI or Medi-Cal.
How to avoid it:
Use a special needs trust to hold the inheritance. This ensures the person can benefit from the funds without jeopardizing their eligibility for public assistance.
6. Not Reviewing Beneficiaries on Non-Probate Assets
Assets like life insurance, IRAs, 401(k)s, and transfer-on-death (TOD) accounts bypass the will or trust and go directly to the named beneficiaries. Unfortunately, many people forget these designations exist—or assume their trust will control them.
How to avoid it:
Keep an up-to-date list of all non-probate assets and double-check that their beneficiary designations are intentional and coordinated with your estate plan.
Final Thoughts
Beneficiary mistakes are easy to make—and even easier to overlook. But they can have major consequences for your loved ones. At Herbert Law Office, we help our clients ensure that their estate plans are thorough, coordinated, and legally sound. Whether you’re just getting started or it’s time for a beneficiary checkup, we’re here to help make the process smooth and stress-free.
Have questions about your beneficiary designations? Let’s review them together. Contact us today at (661) 273-9007 to schedule your FREE consultation.