Beneficiary designations override your will. Your 401(k), IRA, life insurance policy, and bank accounts (if set up as POD — Payable on Death) pass to whoever is named on the beneficiary form, regardless of what your will says. A 25-year-old who still lists a parent or an ex-partner from college as their 401(k) beneficiary will have that money go to the wrong person if they die. Log into every account and verify beneficiaries today.
| Document | What It Does | Cost to Create | Urgency |
|---|---|---|---|
| Beneficiary Designations | Name who receives 401(k), IRA, life insurance, and bank accounts on death — overrides the will | Free — log into each account and fill out the form | Do this today |
| Healthcare Proxy / Medical POA | Names someone to make medical decisions if you are incapacitated and cannot speak for yourself | Free state templates available; attorney review optional | Critical — especially important at college or living away from parents |
| Durable Power of Attorney (Financial) | Authorizes someone to manage your bank accounts and financial affairs if you are incapacitated | Free templates from state bar; attorney review recommended for robustness | High — no one can manage your affairs without it if you cannot |
| Simple Will | Directs how personal property (furniture, car, non-account assets) is distributed; names guardian for minor children | $100–$500 via online services (LegalZoom, Trust & Will); $500–$1,500 via attorney | Important — especially once you have dependents or significant personal property |
Before you turned 18, your parents could speak to your doctor, see your medical records (FERPA for school records; HIPAA for medical), and make financial decisions on your behalf. The day you turn 18, that access ends automatically by federal law. If you are in a serious accident as a college student, your parents cannot get information from the hospital without your prior authorization. Fix: sign a HIPAA authorization form naming your parents (available at any doctor's office or hospital), a healthcare proxy naming the person you want to make decisions, and a FERPA waiver to allow your school to share records. These take 20 minutes.
Primary vs. contingent beneficiaries: always name both. A primary beneficiary receives the account on your death. If the primary predeceases you and you have no contingent named, the account goes through probate — a public, slow, expensive court process. Naming a contingent beneficiary costs nothing and prevents that outcome. Most major custodians (Fidelity, Vanguard, Schwab) allow naming multiple beneficiaries with percentage splits.
Probate is the court process that settles your estate when assets do not pass automatically (by beneficiary designation or joint ownership). Assets going through probate become public record, can be contested by creditors, and can take 6–18 months to resolve. Accounts with valid beneficiary designations skip probate entirely. For most young adults, keeping beneficiaries current on every account is the most powerful estate-planning move available — more impactful than having a will.
A durable power of attorney (DPOA) remains in effect even if you become mentally incapacitated — the 'durable' qualifier is what makes it useful for emergencies. A regular power of attorney terminates at incapacity, which is exactly when you need it most. Without a DPOA, if you are in a coma or severely injured, your family may have to go to court to obtain a conservatorship before they can pay your rent, manage your bank accounts, or handle your student loans.
This module is for general educational purposes only and does not constitute legal advice. Estate laws vary by state. For documents that will actually govern your estate — especially a will, trust, or durable power of attorney — consult a licensed attorney in your state. Free and low-cost resources are available through your state bar's lawyer referral program, law school clinics, and organizations like the American Bar Association's free legal help directory.
Sit with the ideas.
Alex has a $120,000 rollover IRA. Her will leaves all her assets to her brother. Her IRA beneficiary form still names her college ex-partner from three years ago. Alex dies unexpectedly. Who receives the $120,000?