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It is surprisingly easy and common to make mistakes when designating beneficiaries on retirement and investment accounts. While you may think it isn’t a big deal, mistakes with beneficiaries can be quite costly. You may inadvertently disinherit a loved one or leave money to an ex-spouse. With more than 220,000 Americans dying from COVID, it may be time to revisit your beneficiary selections.  Keep reading to find out the costly beneficiary mistakes you need to avoid.

Even for those who have done extensive estate planning, mistakes with beneficiaries can pop up. A will does not control who retirement accounts are passed on to, for example. Similarly, a will can force your estate into probate, which can be costly and time-consuming. For those with a living trust, if the trust is not funded properly, some assets may still need to go through probate. Retirement accounts, and a few other types of accounts, will best be passed (in many cases) via beneficiary.

Accounts including 401(k)s, IRAs, Roth IRAs, life insurance, annuities, and other retirement accounts pass by beneficiary designation. In addition, you can also name beneficiaries on your other non-retirement investment accounts, which are known as Transfer on Death (TOD) accounts. Using a beneficiary designation may allow your heirs to receive your assets in a more tax-efficient manner if they so choose.