Sep 28, 2026 In Plain English – Beneficiary Designations
Introducing: In Plain English – Our New Monthly Term Series
Financial jargon can get in the way of good decisions. Each month, we’ll break down one term or concept you’ve likely heard into a clear explanation you can use. Whether it’s something you’ve heard us mention in a meeting or seen on a statement, this is the spot to get it in plain English.
📖 Term of the Month: Beneficiary Designations
Choosing your beneficiaries is one of the simplest ways to help direct your assets to where you want them to go, but the terms can be confusing. Here’s a quick breakdown:
- Primary beneficiary — The first person (or people) in line to receive the asset. If you name more than one, you can generally split the share in whatever proportion you choose, subject to the account provider’s rules.
- Contingent beneficiary — Your backup. This person receives the asset only if your primary beneficiary is unable to (for example, if they’ve passed away before you).
- Per stirpes — A Latin term meaning “by branch.” If a beneficiary passes away before you, their share doesn’t get reabsorbed — it passes down to their children instead of being split among your other beneficiaries. If they have no living children, their portion would be split among the other beneficiaries.
- Per capita — A Latin term meaning “by head.” If a beneficiary passes away before you, their share does get reabsorbed and is split evenly among your remaining named beneficiaries — it does not pass down to that beneficiary’s children.
- Quick Tips — These terms are defined by the form or plan document you sign, and the details vary by provider — check how your specific account handles them. Some accounts, such as employer retirement plans, may require a spouse’s written consent to name someone else, and state law can also affect the outcome.
Which accounts allow beneficiary designations?
Not every asset works the same way. Some pass through your will (or state law, if you don’t have one); others pass directly to whoever you’ve named on the account — regardless of what your will says. Accounts that typically require (or allow) a beneficiary designation include:
- Retirement accounts (401ks, 403bs, IRAs, Roth IRAs)
- Life insurance policies
- Annuities
- Employer-sponsored benefits (group life, pension plans)
- Bank and brokerage accounts may allow a Transfer on Death (TOD) or Payable on Death (POD) designation
Quick tip: Beneficiary designations generally override what’s written in a will, so it’s worth reviewing them every few years — especially after a marriage, divorce, birth, or death in the family.
Coming next month: We’ll break down mutual funds and ETFs.
Have a term you’d like us to cover? Give us a call — we’re building this series around what you want explained.
Disclosures: Portions of this article were prepared with the assistance of artificial intelligence tools and reviewed by LRIA personnel. All investment-related content reflects the views of LRIA and has been approved by a registered representative. This material is provided for educational and informational purposes only and does not constitute investment, tax, or legal advice or a recommendation to buy or sell any security or open any particular account.
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