This article from Legal Claimant Services gives advice on how to choose beneficiaries and what to expect.

1. Legal Claimant Services Gives Advice on Beneficiaries
Increasingly, traders have the alternative of naming beneficiaries directly on a wide range of financial
goods. The charm: When the account owner dies, the assets go right to the beneficiaries named in
the accounts, bypassing the occasionally long and costly probate process. The issue: Because
these beneficiary appellations override your will, they have to be carefully coordinated with your total
estate strategy.
Lots of people only don't remember whom they named as donees of accounts they opened years
back. Boston lawyer Harry Margolis tells of one-man who wrote a will leaving his entire estate to his
long-time girlfriend, and on his death bed remembered he had certificates of deposit naming family
members, some since dead person, as donees. The guy strived to alter the beneficiary designations
before he died, but the situation has become mired in a litigation.
Advisers often recommend reviewing all your beneficiary designations consistently, at least every
couple of years, but certainly after you go through a life-altering occasion, such as a marriage,
divorce, birth or death of a family member. Employment-changers and retired persons additionally
take notice: Beneficiary designations on retirement plans don't carry over when you roll a 401(k) to a
new company's plan or to an IRA, or when you convert a regular IRA to a Roth IRA
Avoid the inclination to pick out another beneficiary for all of your accounts. One woman left her
estate equally to her two girls in her will, but named one daughter or the other as donee of her
numerous bank and brokerage accounts. The end result: Just about all of her assets handed outside
of her estate, plus one daughter received much much more compared to the other.
Watch out, also, for beneficiary types that don't allow your assets to pass "per stirpes," or similarly
one of the divisions of a family. Say you name your three adult children as beneficiaries of your IRA.
In case that one predeceases you, you could desire that child's share to go to their kids. Yet, many
normal beneficiary forms supply that your two staying mature kids would share the pot.
For retirement plans, the biggest mistake is to name your estate as beneficiary, because that means
when you expire, the complete amount of the plan must be paid out--and taxed--within five years.
Individual beneficiaries, by contrast, could stretch out the distributions--and the taxation--for
decades. Because many folks have a large portion of their assets in retirement accounts, they also
should be sure that the mixture of the distribution arrangements on those accounts and their wills
provide for household members as they want, particularly in complex scenarios such as a second
marriage when there are kids from the first union.
Financial organizations merge. Records can be lost. Keep copies of all your beneficiary forms and
send them certified mail, return receipt requested. Then assess often, possibly at tax time, to make
sure that what your institution has on file is right. Do Not expect your banking, agent or IRA
custodian to inform you if something is amiss along with your beneficiary designations.