Estate planning is more than just having a will direct where an estate will go at death. It encompasses the ability to designate death beneficiaries on financial accounts.

Beware of whom you designate as a beneficiary for your bank, brokerage or retirement accounts. There are advantages to this designation process, but do not expect a new will to trump prior beneficiary designations.

Make sure death beneficiary designation forms are completed consistent with your estate plan.

When you open financial accounts, you are often given the option of designating a death beneficiary, including a person who might, or might not, be in your will.

The advantage of the account designation is that upon your death, the assets pass directly to the named beneficiary (or beneficiaries), bypassing your will and the probate process. This can be a nice feature, but it can also create irreparable harm to the surviving family.

Oftentimes bank employees, who are trying to be helpful, are the ones who assist customers in setting up these accounts, and they end up dispensing legal advice without the qualifications to do so. When helpful but incorrect advice is given, estate-planning attorneys call this “bank teller estate destruction.”

Retirement accounts are particularly complex. If the beneficiary is a spouse who dies before you, the funds in that account, upon the holder’s death, could flow to the estate, triggering a large tax bill.

For retirement accounts, it’s recommended you have contingent beneficiaries who will become beneficiaries if the primary beneficiary dies before you.

In a famous case, Dad failed to change a beneficiary designation on his 401(k) after a divorce. Two months later, Dad died in a car crash.

The Supreme Court ruled that the pre-divorce beneficiary designation (the ex-wife) trumped a state law that disinherited the ex-wife. (Englehoff, U.S. Supreme Court 2001).

To avoid these situations, you should review all of your beneficiary designations at regular intervals, but at minimum, when there is a life-changing event such as births, deaths, marriage or divorce.

Changing jobs is also a life-changing event. If you have a 401(k) retirement account with one employer, the beneficiary designations don’t automatically roll over to the new employer.

So, who should be a death beneficiary? Anyone you choose, but avoid naming minors, people with disabilities, people who lack the ability to manage money, or those who have credit problems. These categories are much better dealt with through trusts.

Sometimes, it is better to name a class of people, like “all my grandchildren who survive me,” rather than naming specific individuals. Then, as more grandchildren are born, the designation does not have to be continually updated.

However, step-grandchildren need to be designated by name.

If you haven’t yet completed or updated the forms to designate beneficiaries for your retirement plan, life insurance, and annuity, do it now. If your forms are out of date, update them.

It’s amazing how often people fail to take these simple steps. The consequences of not doing so can be disastrous.

Brian T. Treacy is an elder law and estate planning attorney with an office in Bluffton.