In the US, beneficiary designation errors can change inheritance distribution — MarketWatch
In the United States, beneficiary designations for retirement accounts, insurance policies and other financial assets can determine who receives the money, regardless of the provisions of a will. As MarketWatch reports, failing to update such designations in time or not following the procedure for changing them in some cases resulted in money going to people whom the account owner may no longer have intended to include among the heirs.
An account for grandchildren remained undistributed
University of Chicago urologist Ed Lyon, with the help of an estate-planning attorney, intended to divide a $1.2 million retirement account equally among 36 grandchildren through separate trusts. However, a relative who checked the beneficiary designations found no confirmation that changes had been made to the documents.
At the time, Lyon was ill and his wife, Vel, was incapacitated. According to the publication, federal law required the wife’s consent to name another primary beneficiary. Seven years after Lyon’s death, the account, worth about $1.7 million, had still not gone to any of his grandchildren. Even if the family wins the court case, the tax advantages of the original plan have largely been lost after the 2019 Secure Act eliminated the option to stretch distributions over a lifetime for most beneficiaries who are not the owner’s spouse.
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A properly executed designation is decisive
In another case, Jeffrey Rolison named his then-girlfriend Margaret Losinger as beneficiary in his early 20s, but did not change the documents after their breakup. When Rolison died nearly 40 years later, Losinger inherited about $1 million. His brothers challenged the payment, but the court ruled that the designation contained in the documents was valid.
In February 2026, the U.S. Court of Appeals for the Seventh Circuit ruled against the estate of Carl Kleinfeldt, who worked for more than 30 years at Packaging Corporation of America. After the divorce, his assistant requested by fax that his former wife, Dana Langdon, be removed from the list of beneficiaries under the 401(k) plans, pension plan and life insurance. At the same time, the plan rules required changes to be made by phone or through an online portal. The company changed Langdon’s status from “wife” to “former wife,” but left her as the primary beneficiary.
When to review documents
The article advises reviewing beneficiary designations after a divorce, the birth or adoption of children, remarriage, the death of a relative, a job change or a change in the administrator of a retirement plan. It is also worth obtaining written confirmation of changes and checking whether the combined shares of all designated beneficiaries total 100%.
