Date:
December 29, 2025
Author:
Anastasia Fainberg
/
Founder & Managing Partner
Most people in Colorado don’t realize this, but a quiet “estate plan” is already attached to your life. It’s not your will. It’s not your trust.
It’s the small boxes you checked years ago on a 401(k) form, a life insurance application, or a bank account. Those beneficiary designations decide who gets some of your largest assets, and in many cases, they override everything your will says.
As a Denver estate planning attorney, I see the fallout from this all the time. A divorce that happened ten years ago. A new baby. A remarriage. The family believed “the will controls everything,” only to find that the money followed the old form instead.
In this article, I want to calmly walk you through how beneficiary designations work in Colorado, why they’re so powerful, and how to align them with your overall estate planning so your intentions, not outdated paperwork, drive what happens for your family.
Why Beneficiary Designations Are Considered Estate Planning in Colorado
For most Denver families, retirement accounts and life insurance are some of the biggest assets they’ll ever own.
In a city where typical home values hover around the $600,000 mark, retirement and investment accounts often sit right beside the house as major pieces of a family’s legacy.
A 2025 analysis published by Kiplinger, using Bureau of Labor Statistics and Social Security data through a GOBankingRates study, estimates that retirees in Colorado need roughly $980,000 in savings to cover typical retirement expenses under a 4% withdrawal rule. That means a single 401(k) or IRA can easily hold a lifetime of security for your spouse or children, which is exactly why the name on that beneficiary line matters so much.
At the same time, only about one-third of American adults have a will or living trust in place, which means many families are relying almost entirely on whatever their forms say at the bank or HR portal.
Those forms don’t update themselves. They don’t know you remarried. They don’t know your child now has a disability, or that a relationship has broken down.
They just do what they’ve been told… sometimes decades later.
Pro Tip: If you’ve ever thought about calling a Denver estate planning attorney, you’re already ahead of the curve. The next step is making sure those beneficiary forms actually match the plan you think you have.
Case Study: Maria (Boulder Mom, Outdated Beneficiary Form)
Maria was a single mom in Boulder in her mid-50s. She had a house, some savings, and a large 401(k) from years of work at a tech company.
She had divorced her first husband more than a decade earlier. She had also created a will that clearly left everything to her daughter, Sofia.
When Maria passed unexpectedly, Sofia assumed she would inherit the retirement account that was supposed to help pay off the house and finish grad school.
But the 401(k) paperwork told a different story.
Maria had never updated the beneficiary designation after her divorce. On file, the primary beneficiary was still her ex-husband. Under federal retirement plan rules, the plan followed that designation. The company had no legal authority to “honor the will instead” or to guess what Maria “really meant.”
Sofia received the house and a smaller bank account through probate. Her mother’s entire retirement account, hundreds of thousands of dollars, went to someone who hadn’t been part of their family for years.
Legally, the system worked exactly the way the documents said it should. Emotionally, it felt like a betrayal of everything Maria wanted for her daughter. Stories like Maria’s are sadly not rare—one wrong name on a form can become a million-dollar beneficiary mistake.
Wills, Trusts, and Beneficiary Designations: What Actually Controls What in Estate Planning in Colorado
When I sit down with families as their estate planning lawyer, I often draw three simple columns on a legal pad: Will, Trust, Beneficiary Form.
Here’s the plain-English version of how they interact in Colorado:
1. Will (Last Will and Testament)
Your will controls assets that are in your name alone with no beneficiary designation and no special title. These assets usually go through probate in Colorado before your heirs receive them.
2. Revocable Living Trust
A trust is a separate legal “bucket” you create during life. Any assets properly titled in the name of that trust follow the trust instructions, not the will, and typically avoid probate in Colorado courts. Working with a trust and estate attorney is how many Denver families keep things private, efficient, and controlled.
3. Beneficiary Designations (POD/TOD/Retirement/Life Insurance)
These are contracts. They say: “When I die, pay this account directly to the person(s) named here.” They bypass your will and usually bypass probate. The institution must follow the last valid designation they have on file. So if your will says “everything to my kids,” but your 401(k) still names your ex-spouse, the 401(k) goes to the ex-spouse.
If your trust is drafted by a Denver estate planning attorney, but your life insurance is still payable “to my estate,” you may have just dragged that money into probate and made it more vulnerable to creditors and conflict.
In Colorado, we can often coordinate all three, will, trust, and beneficiary forms, so they work together as one plan instead of fighting each other.
What This Really Feels Like for Colorado Families
From a legal perspective, beneficiary designations are tidy.
From a human perspective, they can be devastating when they’re wrong.
I’ve sat with adult children in Denver who thought their parents had “everything taken care of,” only to discover that an old life insurance policy named a long-estranged relative. I’ve watched surviving spouses realize that a retirement account was left directly to adult children, leaving the spouse financially vulnerable.
No one set out to hurt anyone. They were just busy. Life changed more quickly than the paperwork.
Estate planning in Colorado isn’t just about documents; it’s about dignity. It’s about making sure the people you love are actually the ones supported when it matters most.
Key Legal Concepts Colorado Families Need to Understand About Beneficiaries
Beneficiary designation
This is the instruction on an account or policy that tells the company who gets the money when you die. In real life, it often controls more dollars than the will itself.
Primary vs. contingent beneficiary
Primary beneficiaries are first in line. Contingent beneficiaries are backups. In Colorado, if your primary beneficiary has died or can’t be located and you never named a contingent, the account may default to your estate, meaning probate, delay, and extra expense.
Per stirpes vs. per capita
These are just Latin phrases for how money flows down the family tree. If you choose “per stirpes,” and one of your children dies before you, their share can pass to their children (your grandchildren). If you choose “per capita,” that share may instead be redistributed among your remaining living beneficiaries, which can unintentionally disinherit a branch of the family.
Payable-on-death (POD) and transfer-on-death (TOD) designations
Colorado allows many bank and investment accounts (and even some real estate) to pass by POD or TOD. Used correctly and coordinated with a trust attorney, these tools can be helpful. Used carelessly, they can create unequal inheritances, conflict between siblings, or problems if a beneficiary is a minor or has special needs.
Divorce and Colorado law
Colorado has rules that can sometimes treat an ex-spouse as having predeceased you for certain non-probate transfers after divorce. But these rules don’t automatically fix every situation, and federal law can override them for some retirement plans. That’s why relying on “the law will fix it” is risky; reviewing and updating designations with an estate planning attorney in Denver is safer than hoping a statute rescues an old form.
Minor and special needs beneficiaries
Naming a minor child outright can force a court-supervised conservatorship. Naming a child with a disability outright can jeopardize vital benefits. In both situations, routing assets through a properly designed trust, often drafted with a special needs trust attorney, protects them far better than a simple name on a form.
The Reality: Colorado Has a Plan If You Don’t Review Your Beneficiaries
Here’s the hard truth: Colorado, and your financial institutions, have a default plan if you never look at your forms again.
If You Do Nothing…
Your accounts follow their existing beneficiary designations, even if they’re decades old. If there’s no valid designation, the institution follows its contract or sends the money to your estate for probate under Colorado law.
If You Create a Custom Plan…
Your will, trust, and all beneficiary designations are coordinated. Accounts that should go directly to people do so in a thoughtful way. Accounts that should flow into a trust, especially for minor kids, blended families, or special needs, are retitled to support that plan.
One path leaves your family at the mercy of old paperwork and default rules. The other lets your values, your relationships, and your current life reality lead the way.
Common Misconceptions About Beneficiary Designations
Myth #1: “My will controls everything.”
In reality, beneficiary designations on retirement accounts, life insurance, and many financial accounts usually override your will. Your will only controls what isn’t already spoken for by a contract, title, or trust.
Myth #2: “The bank will figure it out if something happens.”
The bank or HR department is required to follow the paperwork they have. They are not allowed to guess what you “would have wanted.” If the designation is outdated, incomplete, or names someone who has died, your loved ones are left untangling that in probate court.
Myth #3: “My family knows my wishes, so they’ll just work it out.”
I wish that were always true. In practice, grief, money, and old family dynamics can collide in painful ways. Clear, updated designations reduce the chance that siblings or spouses are forced into conflict over what you “really meant.”
Myth #4: “I updated everything once years ago, so I’m fine.”
Life in Colorado changes fast: jobs, marriages, houses, businesses. Best practice is to review beneficiary designations after every major life event and at least every couple of years.
Myth #5: “I don’t have enough money for this to matter.”
For many Denver families, even a modest 401(k) or life insurance policy can be the difference between stability and struggle for a surviving spouse or kids. You don’t need to be wealthy to make these forms worth getting right.
Why This Really Matters
For me, this conversation is not about chasing every technical detail. It’s about honoring the story you’re trying to write for your family.
Your beneficiary designations should reflect your current relationships, your values, and the way you want to support the people you love in Colorado: from the spouse who shares your mortgage to the adult child caring for aging parents.
As I often tell families, it’s not about money. It’s about the people you love.
How to Start: Simple Steps to Align Your Beneficiaries and Your Plan
- Gather your accounts.
Make a list of every retirement account, life insurance policy, bank account, investment account, and annuity. - Pull the actual beneficiary forms.
Don’t rely on memory. Log in, call, or request written confirmation of who is currently listed on each account. - Compare to your estate plan.
Lay your will or trust beside those forms. Ask: “If I died yesterday, would this money go where I think it would?” - Flag special situations.
Note any minor children, beneficiaries with disabilities, blended family dynamics, or business interests. These are the places where coordinated estate planning services matter most. - Work with a Colorado-based estate planning attorney in Denver.
A local estate planning attorney, in Maria’s case, Boulder, understands how Colorado law, federal retirement rules, and your family dynamics intersect. - Enroll in an ongoing review program.
At my firm, our Client Care Program and LIFT (Legal, Insurance, Financial, Tax) approach are designed to keep your will, trust, and beneficiary designations aligned as life changes, not just the day you sign.
Colorado Beneficiary Designation FAQs
1. Do beneficiary designations really override my Colorado will or trust?
Yes, most of the time. For retirement accounts, life insurance, and many bank or investment accounts, the company must follow the last valid beneficiary designation on file, even if your will or trust says something different.
2. How often should I review my beneficiary designations in Colorado?
A good rule of thumb is every 2–3 years and after every major life event: marriage, divorce, birth or adoption of a child, death of a beneficiary, starting or selling a business, or moving to Colorado from another state.
3. What happens if I don’t name any beneficiary at all?
If you leave a designation blank, the account usually follows the default rules in the contract, often your estate. That can mean probate in Colorado, extra delay, and less flexibility in how and when your loved ones receive the funds.
4. Can I name my minor children directly as beneficiaries?
You can, but it’s rarely wise. A Colorado court may have to appoint a conservator to manage the money until they’re 18, and then they receive it outright. Many parents prefer to have a trust (often created with a trust attorney) hold and manage funds for children to a more mature age.
5. How does divorce affect beneficiary designations in Colorado?
A divorce decree and Colorado statutes can change an ex-spouse’s rights in some situations, but not all, especially with employer-sponsored retirement plans governed by federal law. Never assume the divorce automatically changed your designations. Go in and update every account intentionally.
6. What if I have a child with special needs?
Naming that child outright can jeopardize crucial benefits. A better strategy is often to name a properly drafted special needs trust as beneficiary, coordinated with a special needs trust attorney, so the child can benefit from the funds without losing public assistance.
7. Can my trust be the beneficiary of my 401(k) or IRA?
Sometimes, yes. It depends on how the trust is drafted and your goals. In Colorado, we often name a trust as beneficiary when we need control, protection, or special planning (for minors, blended families, or spend-thrift beneficiaries). The details are technical, so this is an area where working with an experienced estate planning attorney is essential.
8. I recently moved to Colorado. Do I need to redo my beneficiary forms?
Your existing forms are still valid, but the way they interact with Colorado law, taxes, and your new estate planning strategy may have changed. A review with a local estate planning lawyer is a smart first step.
A Final Word of Encouragement
If reading this makes you think, “I have no idea what’s on my forms,” you’re not alone, and you’re not behind.
Most families I meet in Denver have never been shown how powerful these designations really are. Once they see it, they’re relieved to learn that with the right guidance, aligning everything is straightforward and deeply protective.
Don’t leave your family’s future to a mix of old paperwork and guesswork. Don’t let a forgotten form speak louder than your real intentions.
Don’t leave your family’s future to chance. Schedule your consultation with Legacy Law Group Colorado today and take the first step toward peace of mind.
