Ex Spouse May Receive Your IRA
When it comes to your financial legacy, few steps are as simple — or as often overlooked — as naming your beneficiaries. This small box on a retirement or investment form determines who inherits your money. Yet many people fill it out once and never look back.
Failing to update or correctly complete beneficiary forms can undo years of careful planning. It can even send your assets somewhere you never intended — in some cases, to the state itself.
Why Beneficiaries Matter More Than Wills
A common misconception is that your will controls who inherits your retirement accounts. In truth, accounts like 401(k)s, IRAs, annuities, and life insurance pass by contract, not by will. Whoever is listed on the beneficiary form receives the funds directly, regardless of what your will says.
If your will names your current spouse, but your IRA still lists your ex-spouse from 15 years ago, your ex will likely get the money. Courts and custodians are bound by the paperwork on file.
That’s why reviewing your beneficiaries is as important as rebalancing your investments.
How Spouses and Families Commonly Set Up Beneficiaries
Most married individuals list their spouse as the primary beneficiary on retirement and insurance accounts. After the spouse, they often name children as contingent beneficiaries — those who inherit if the primary beneficiary has already passed.
Here’s how these designations often look in practice:
- Traditional Couple:
Each spouse lists the other as primary and their children as contingent, usually with equal shares. - Blended Families:
Individuals with children from prior marriages often split designations by percentage or by account, ensuring both current spouse and children are provided for. - Older Spouses Nearing Retirement:
It’s common for older couples to have one another listed across all accounts. If both pass away without updating contingent beneficiaries, the account may revert to the estate — triggering delays, probate, and possibly higher taxes.
Adding “Per Stirpes” Can Prevent Costly Oversights
One of the most useful yet misunderstood options on beneficiary forms is “per stirpes.” It’s a Latin term meaning “by branch,” and it ensures that if one of your named beneficiaries dies before you, their share passes to their heirs (usually their children) instead of being divided among the remaining beneficiaries.
For example, if you list your three children equally and one passes away, a per stirpes designation directs that child’s share to their own children — keeping the inheritance in that family line. Without per stirpes, the other two siblings would simply split the entire account, cutting out your grandchildren entirely.
Most custodians allow you to select per stirpes with a checkbox or written note, but it’s often overlooked.
TOD and POD Designations
For non-retirement accounts, many banks and brokerage firms offer TOD (Transfer on Death) or POD (Payable on Death) designations. These work similarly to beneficiaries on retirement accounts — avoiding probate and allowing assets to transfer directly to named individuals.
TODs can be applied to investment accounts; PODs are typically used for bank accounts or certificates of deposit. They’re simple, free, and ensure that even small accounts pass smoothly to loved ones.
Common Beneficiary Mistakes
Even well-intentioned investors make errors that can cause confusion or conflict later. Some of the most common include:
- Leaving the line blank.
If no beneficiary is listed, the account usually defaults to your estate. That means the assets go through probate — a court-supervised process that delays distribution and can expose your assets to creditors. - Naming a minor directly.
Children can’t legally own inherited assets until they reach adulthood. Without a trust or custodial account, a court may have to appoint a guardian, adding cost and complexity. - Failing to update after divorce or remarriage.
Florida law automatically revokes an ex-spouse’s claim on certain accounts, but federal ERISA rules governing 401(k)s may override that protection. It’s safer to update the form directly. - Listing “my estate” as the beneficiary.
That phrase almost guarantees probate. It also removes potential tax advantages for retirement accounts.
If No Beneficiary Is Listed
If you fail to name a beneficiary — or if all listed beneficiaries have passed away — the account typically becomes part of your probate estate. In Florida, that means it’s distributed under your will if you have one, or under Florida intestacy laws if you don’t.
Under intestacy rules, assets go to your surviving spouse first, then to children, then to parents, siblings, and other relatives in order of legal priority. If no legal heirs can be located, the assets may escheat to the State of Florida — meaning the state takes ownership.
Other states follow a similar pattern, though timelines and probate thresholds vary. It’s a distant outcome, but it does happen — especially with older, forgotten accounts or policies opened decades ago.
Simple Steps to Get It Right
- List every account — retirement, bank, and insurance.
- Confirm current beneficiaries directly with each institution.
- Add contingents and consider “per stirpes” where appropriate.
- Review every few years or after major life events.
- Use TOD/POD designations to keep non-retirement assets out of probate.
The Bottom Line
Your beneficiary designations speak louder than your will. They determine not just who inherits, but how easily your loved ones receive what you intended for them.
In estate planning, a little paperwork can prevent a lot of heartbreak. A few minutes spent today reviewing those forms might be the most meaningful legacy planning you ever do.
Evan R. Guido, Senior Wealth Advisor, is the Founder of Aksala Wealth Advisors LLC, a 2018 Forbes Top Next-Gen Advisors award recipient. Evan heads a team of financial strategists for clients who consider themselves the “Millionaire Next Door.” He can be reached at 941-500-5122 Aksala.com eguido@aksalawealth.com 6260 Lake Osprey Dr. Lakewood Ranch, FL 34240. Securities offered through Cetera Wealth Services, LLC member FINRA/SIPC. Advisory Services offered through Cetera Investment Advisers LLC, a registered investment adviser. Cetera is under separate ownership from any other named entity. The views and opinions presented in this article are those of Evan R. Guido and not of Cetera or its subsidiaries. These opinions are based on Evan’s observations and research and are not intended to predict or depict performance of any investment. These views are subject to change based on subsequent developments. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. These views should not be construed as a recommendation to buy or sell any securities and purely for education and entertainment. Past performance does not guarantee future results. The Top Next Gen list includes 250 rising advisors who help manage over $490 billion in client assets. Each advisor was nominated by their firm, then vetted and ranked by SHOOK Research. The rankings, developed by SHOOK Research, are based on an algorithm of qualitative criterion, mostly gained through telephone and in-person due diligence interviews, and quantitative data. Those advisors who are considered have a minimum of four years' experience and the algorithm weighs factors like revenue trends, assets under management, compliance records, industry experience and those that encompass the highest standards of best practices. Portfolio performance is not a criterion due to varying client objectives and lack of audited data. Neither Forbes nor SHOOK receive a fee in exchange for rankings. Listing in this publication and/or award is not a guarantee of future investment success. This recognition should not be construed as an endorsement of the advisor by any client. No compensation was provided directly or indirectly by the recipient for participation or in connection with obtaining or using the third-party rating or award.