If you don’t properly designate your estate plan beneficiaries, the cost (in time, money and emotional stress) is quite high for your loved ones after you die.

Failing to name a beneficiary means your retirement, investment and bank accounts and insurance policies will automatically become part of your estate when you die. Any planning you’ve done will be undercut by having all of these assets go through probate. Beneficiaries may not see their inheritance for months or years.

It’s even worse for retirement accounts like IRAs. Any ability your heir might have had to withdraw assets over time will be lost.

Have You Named a Contingency Beneficiary?

Most people name their spouse, an adult child, or a sibling as their primary beneficiary. However, if the primary beneficiary should predecease you and there is no contingency beneficiary named, it is as if you didn’t have a beneficiary at all.

Having a contingency beneficiary has another benefit: the primary beneficiary has the option to execute a qualified disclaimer. This means some assets may be passed along to the next-in-line heir.

Let’s say your spouse doesn’t need the money or doesn’t want to take it because of tax implications. Naming a contingency beneficiary means someone else in the family can receive the assets.

Be Precise With Names

Naming beneficiaries without taking care to use their proper legal name or identify the person with specificity has led to more surprises than you can imagine. If there are three generations of Geoffrey Paddingtons in the family and the only name on the document is Geoffrey Paddington, who will receive the inheritance?

Use the person’s full name, their relationship to you (“child,” “cousin,” etc.) and if the document requires a Social Security number for identification, use it.

Update Your Documents

When was the last time you reviewed beneficiary documents? The only time many people look at these documents is when they open the account, start a new job, or buy an insurance policy.

Every few years, you should gather all of your financial and insurance documents and make sure the same people named in the past are still the ones you want to receive your assets on death.

Tell Your Family About Your Plans

Finally, talk with loved ones about your legacy and your wishes. Let them know that an estate plan exists and you’ve given time and thought to what you want to happen when you die. There’s no need to give exact amounts. However, a bird’s eye view of your plan will help establish expectations.

If naming beneficiaries is challenging because of a complex situation, your estate planning attorney will be able to help as a sounding board or with estate planning strategies to accomplish your goals.