Why Updating Your Beneficiaries Is Especially Important for LGBTQ+ Families
- Katie Kimball Dyer
- 5 minutes ago
- 8 min read
When was the last time you checked the beneficiaries listed on your financial accounts?
For many people, the answer is years ago. Some may not remember naming anyone at all. Others assume their will, marriage, or family relationships will automatically determine what happens to their money.
Unfortunately, assumptions are not a financial plan
Beneficiary designations can determine who receives retirement accounts, life insurance proceeds, and other assets after someone dies. When those designations are missing or outdated, the result may be very different from what the account owner intended.
This can be especially significant for LGBTQ+ individuals, unmarried partners, chosen families, blended families, and anyone whose closest relationships are not fully recognized by traditional legal defaults.
In Episode 7 of The Heart of Finance, Katie Kimball Dyer and Karen, founder of Planning for Good, discuss why beneficiary planning is one of the most important and frequently overlooked parts of protecting the people you love.
What Is a Beneficiary?
A beneficiary is a person, trust, organization, estate, or other entity designated to receive an account or benefit after the owner dies.
Beneficiaries are commonly named on:
Employer retirement plans
Individual retirement accounts
Life insurance policies
Annuities
Certain investment accounts
Some bank and credit union accounts
Employer-provided benefits
Depending on the account, you may be able to name both a primary beneficiary and a contingent beneficiary.
The primary beneficiary is generally first in line to receive the asset. A contingent beneficiary may receive it if the primary beneficiary dies before the account owner or cannot inherit for another reason.
These designations may appear to be a small administrative detail, but they can carry enormous consequences.
Your Will May Not Control Every Account
One common misunderstanding is that a will determines what happens to every asset.
Certain accounts pass according to the beneficiary designation attached to the account. That means the name on the beneficiary form may control who receives the asset, even if a will contains different instructions.
For example, someone may update a will after a divorce but forget to change the beneficiary on an old retirement account or life insurance policy. The former spouse could potentially remain listed on the account.
A person might also write in a will that everything should go to a current partner while leaving an outdated beneficiary designation naming a relative.
This is why beneficiary forms and estate documents should be reviewed together. They are different pieces of the same puzzle, and they need to tell a consistent story.
Legal Defaults May Not Reflect Your Real Family
When an account has no valid beneficiary, the next steps may be determined by the account agreement, retirement plan rules, the person’s estate documents, or state law.
Those systems often prioritize legally recognized spouses and biological relatives.
They may not automatically recognize:
An unmarried long-term partner
A close friend
A former partner who remains family
A foster child
A stepchild who was not legally adopted
A caregiver
A member of a chosen family
A community organization
A person whose legal relationship does not reflect their emotional importance
For LGBTQ+ people who are estranged from biological relatives, this can create an especially painful outcome.
Money could pass to relatives the account owner had not spoken to in years while the partner, friend, or chosen family member who shared their daily life receives nothing.
The law cannot know who supported you, cared for you, or stood beside you. It can only work with the legal information available.
If you want your financial arrangements to reflect your actual relationships, you often need to put those wishes in writing.
Unmarried Partners Need to Be Especially Intentional
Marriage may provide certain automatic rights and protections, but many couples are unmarried.
Some do not want to marry. Others may be hesitant because of financial, personal, legal, healthcare, or family considerations. A couple may also be engaged, recently partnered, or still deciding what marriage means for them.
Regardless of the reason, unmarried partners should not assume that living together, sharing expenses, or being together for many years will automatically give one partner rights to the other’s financial accounts.
Each partner should review:
Retirement accounts
Life insurance policies
Bank accounts
Brokerage accounts
Employer benefits
Property ownership
Estate documents
Healthcare directives
Financial powers of attorney
This does not mean every account must name the partner. It means the decision should be intentional.
The most important question is not, “What do most couples do?”
It is, “What do we want to happen, and have we completed the documents needed to support that decision?
Beneficiaries Need to Be Updated After Life Changes
Beneficiary planning is not a one-time task.
Relationships and families evolve. A designation that made sense ten years ago may no longer reflect your wishes.
Review your beneficiaries after events such as:
Marriage
Divorce or separation
The beginning or end of a long-term partnership
The birth or adoption of a child
The death of a beneficiary
A significant change in family relationships
Estrangement or reconciliation
A legal name change
A gender transition
A move to another state
A major change in wealth or property
The creation of a trust
A change in caregiving responsibilities
Even when nothing dramatic has happened, it is wise to review your accounts periodically.
People forget what they selected years earlier. Institutions merge, employers change benefit providers, and old paperwork may not follow someone as cleanly as expected.
A brief review can uncover missing information before it becomes a crisis.
Names and Identifying Information Must Be Accurate
A loved one’s name may change because of marriage, divorce, adoption, personal preference, or gender transition.
When that happens, beneficiary information may also need to be updated.
An account may request details such as:
Full legal name
Date of birth
Relationship to the account owner
Address
Social Security number or tax identification information
The requirements vary by institution.
A person may use one name socially while financial or legal documents still reflect another. An affirming financial professional can help track both the name required for official paperwork and the name the person actually uses.
This is not simply a matter of courtesy. Accurate information can help reduce confusion and delays when a claim needs to be processed.
Clients should also feel safe asking how identity information will be recorded, who can see it, and what documentation the institution requires.
Bank and Investment Accounts May Use Different Language
Not every account uses the word “beneficiary.”
A bank account may offer a payable-on-death arrangement. An investment account may allow a transfer-on-death registration. Other institutions may use terms such as successor owner.
Because the terminology varies, asking only, “Can I add a beneficiary?” may not always produce a complete answer.
A more direct question is:
“If I die, who receives this account?”
Then ask:
Can I name the person who should receive it?
What is that designation called here?
Is there a form I need to complete?
Can I name more than one person?
Can I add a contingent recipient?
Does this designation avoid probate?
Are there restrictions based on the type of account?
How can I confirm that the change was processed?
Do not assume that adding someone as a joint owner is the same as naming them to receive an account after death.
Joint ownership may give the other person access or ownership rights while you are alive. That can have consequences far beyond estate planning.
Before changing account ownership, understand exactly what rights you are creating.
Retirement Plans May Have Special Rules for Spouses
Certain employer-sponsored retirement plans may have specific spousal protections.
Depending on the type of plan, a spouse may be required to be the primary beneficiary unless they provide written consent to another choice.
This means beneficiary planning is not always as simple as typing a different name into an online form.
Couples should understand:
Whether spousal consent is required
Whether the form must be notarized
Whether a former spouse remains listed
Whether the plan has its own default rules
What happens if the beneficiary dies first
How the account will be distributed after death
Because retirement account rules can be complex, consider reviewing them with a financial planner, benefits representative, tax professional, or estate-planning attorney.
Beneficiary Planning Is Only One Part of Protecting Your Family
Naming beneficiaries is important, but it does not replace a complete estate and emergency plan.
A beneficiary designation may determine who receives an account. It does not necessarily determine who can make medical decisions, manage bills, care for children, handle pets, access digital information, or act on your behalf while you are alive.
A broader plan may include:
A will
A trust
A healthcare proxy or healthcare power of attorney
A financial power of attorney
An advance healthcare directive
Guardianship instructions
Property ownership arrangements
Funeral or memorial preferences
Digital account instructions
Emergency contacts
Care instructions for children or pets
For LGBTQ+ individuals and families, these documents can be especially important when biological relatives may not understand or respect the person’s relationships, identity, or wishes.
The goal is to reduce uncertainty before an emergency occurs.
Make Your Wishes Easy to Find
Completing the forms is only part of the work.
The people you trust should know that important documents exist and how to access them when needed.
Consider creating an emergency document kit containing copies of:
Identification documents
Beneficiary confirmations
Insurance information
Retirement and investment account details
Bank account information
Estate documents
Healthcare directives
Powers of attorney
Property records
Contact information for financial, legal, and tax professionals
Instructions for recurring household responsibilities
Store the information securely, but do not hide it so thoroughly that no one can find it.
Physical copies may be kept in a portable, fire-resistant document bag or another protected location. Secure digital copies can provide backup access if the physical documents are lost or inaccessible.
The goal is not to create a museum-quality archive. It is to make a difficult moment slightly easier for the people you love.
A Simple Beneficiary Review Checklist
Use the following questions as a starting point:
Which of my accounts allow or require a beneficiary?
Is a beneficiary currently listed on each account?
Is the person’s name and identifying information accurate?
Does the designation still reflect my wishes?
Have I named a contingent beneficiary?
Have any beneficiaries died or become estranged from me?
Have I recently married, divorced, separated, or formed a new partnership?
Do my beneficiary forms align with my will or trust?
Do my chosen family members have the legal protections I intend?
Have I saved confirmation that each update was completed?
You can work through the list one account at a time.
Start with retirement plans and life insurance, then review investment and bank accounts. Ask each institution what options are available and request written confirmation of any changes.
Your Relationships Deserve More Than Assumptions
Beneficiary planning is an act of care.
It is a way of saying:
This is my family.
These are the people I trust.
This is who I want to protect.
These are the wishes I want respected.
For LGBTQ+ individuals and families, putting those intentions into writing may be especially important because traditional systems do not always reflect chosen family, unmarried partnerships, or complex family relationships.
You should not have to rely on strangers, institutions, or legal defaults to guess what you wanted.
Take the time to review your accounts, ask direct questions, and coordinate your beneficiary designations with the rest of your financial and estate plan.
A few forms completed today could prevent confusion, conflict, and heartbreak later.
Listen to Episode 7 of The Heart of Finance for Katie and Karen’s full conversation about LGBTQ+ inclusive financial planning, beneficiaries, chosen family, emotional safety, and protecting the people who matter most.
Find The Heart of Finance wherever you listen to podcasts, or watch the full conversation on YouTube.
This article is for general educational purposes and is not individualized financial, tax, or legal advice. Beneficiary, inheritance, retirement-plan, and estate laws vary. Consult qualified professionals regarding your specific accounts, documents, and circumstances.
