Retired couple, walking closely together.
Personal finance

Should you add beneficiaries to your accounts?

Designating your beneficiaries is an important financial matter, so be sure to make your decisions carefully.
3 minute read

Retirement vs. nonretirement accounts

Vanguard offers different beneficiary options for retirement accounts and nonretirement accounts—we’ll walk you through those here.

 

Retirement accounts

The beneficiary designations that you make on a retirement account, like an IRA supersede any other instructions you leave, including your will. So, if your will states that your spouse is your IRA beneficiary, but the IRA itself designates your children as your beneficiaries, your children will inherit your IRA.

If you don't designate beneficiaries for your IRA, your assets will pass to your spouse (if you're married at the time of your death) or your estate (if you're not married at the time of your death).

Learn more about your IRA beneficiary options

 

Nonretirement accounts

The decision whether to name beneficiaries on your nonretirement accounts should be made in the context of your estate plan. Depending on the choices you've already made, your nonretirement accounts may not need beneficiaries. Consult an estate-planning attorney to determine what's best for you.

Learn more about your nonretirement account beneficiary options

What types of accounts do you have?

Your options for whether and by what method to add beneficiaries to your accounts depend on the accounts that you hold.
 

IRAs

The beneficiary designations that you make on a retirement account like an IRA generally supersede any other instructions you leave, including your will. So if your will states that your spouse is your IRA beneficiary, but the IRA itself designates your children as your beneficiaries, your children will inherit your IRA.

If you don't designate beneficiaries for your IRA, your assets will pass to your spouse (if you're married at the time of your death) or your estate (if you're not married at the time of your death).

Learn more about adding beneficiaries to your IRAs

Beneficiaries & backup beneficiaries

A beneficiary receives your assets after your death. Your beneficiary must survive you (or be a charity or an existing trust). A backup or contingent beneficiary will inherit your assets only if you have no surviving beneficiaries.
 

Nonretirement accounts

The decision whether to name beneficiaries on your nonretirement accounts should be made in the context of your estate plan. Depending on the choices you've already made, your nonretirement accounts may not need beneficiaries. Consult an estate-planning attorney to determine what's best for you.

Learn more about adding beneficiaries to your nonretirement accounts
 

Joint accounts

Your Vanguard joint accounts don't need beneficiaries. Joint accounts simply pass to the surviving owner.

IRA (individual retirement account)

A type of account created by the IRS that offers tax benefits when you use it to save for retirement.

Will

A legal document in which a person leaves instructions for how to distribute his or her property after death.

Estate

All of a decedent's liabilities and assets, including property (real and personal).

Trust

A legal arrangement through which property, such as investments or real estate, is held by a trustee on behalf of a beneficiary. Trusts are often used as part of a plan to minimize or eliminate estate taxes.

Estate plan

A plan to carry out an individual's wishes as to the administration and disposition of his or her property before or after his or her death.

Joint account

An account with two or more owners.
GOOD TO KNOW

The beneficiaries you select for your IRA won't carry over to your nonretirement account, or vice versa. But if you have multiple Vanguard IRAs of the same type—for example, 2 traditional IRAs—the beneficiaries you designate on one of them will carry over to all of them.

Beneficiaries and backup beneficiaries

Below we outline the different beneficiary types and their relationship to you, the account owner.

Account owner

Beneficiaries receive the assets in your account(s) upon your passing. Let's say you've listed Jane and John as beneficiaries and Steve and Quinn as backup beneficiaries.

Beneficiaries

In the event of your death, Jane and John will each inherit a portion of your assets. If Jane dies before you, John will inherit her portion, and vice versa.

Backup beneficiaries

As backup beneficiaries, Steve and Quinn will only receive your assets if both Jane and John pass before you.

Accounts ineligible for beneficiaries

You cannot add beneficiaries to all Vanguard account types. For example, we don’t allow you to add beneficiaries to joint accounts because joint accounts simply pass to the surviving owner. Below are all the account types that are not eligible for beneficiaries.

  • Joint accounts 
  • UGMA/UTMAs
  • Trusts
  • Estate accounts
  • Bankruptcy accounts
  • Organization accounts
  • Custodial/guardian/conservator accounts (with some exceptions)

 

How does the inheritance process work

Your beneficiaries will need to contact Vanguard and alert us to your passing. We’ll ask for a death certificate and some other information/paperwork. 

Once we have everything on file, we’ll transfer the assets to any beneficiaries listed on the account. You can learn more about the inheritance process here.

Explore professional advice

We offer expert help at the low cost you'd expect from Vanguard.

Compare advice options

Consolidate your accounts

Consider moving accounts you hold elsewhere to Vanguard. You'll enjoy more control of your portfolio now and save legwork for your heirs later.

Transfer accounts

Make a lasting difference

Vanguard Charitable offers a flexible and convenient way to make the most of your philanthropy.

Learn more

Vanguard understands your legacy

Designate beneficiaries

Log in

Are you inheriting a Vanguard account?

See how to transfer it into your name

Vanguard understands your legacy

Designate beneficiaries

Log in

Are you inheriting a Vanguard account?

See how to transfer it into your name

All investing is subject to risk, including the possible loss of the money you invest.

Vanguard's advice services are provided by Vanguard Advisers, Inc. ("VAI"), a registered investment advisor, or by Vanguard National Trust Company ("VNTC"), a federally chartered, limited-purpose trust company.

The services provided to clients will vary based upon the service selected, including management, fees, eligibility, and access to an advisor. Find VAI's Form CRS and each program's advisory brochure here for an overview.

VAI and VNTC are subsidiaries of The Vanguard Group, Inc., and affiliates of Vanguard Marketing Corporation. Neither VAI, VNTC, nor its affiliates guarantee profits or protection from losses.