This is the highest-leverage paragraph in the chapter, so read it twice. A beneficiary designation on a 401(k), IRA, HSA, or life-insurance policy is a contract with the custodian, and it overrides your will. A will leaving everything to your new spouse is worthless against a $2 million IRA that still names your ex — the custodian pays the named beneficiary, and the courts back the custodian. Marriage does not auto-update these designations. Divorce does not reliably revoke them either: some state statutes purport to void an ex-spouse designation, but federal law governing employer retirement plans can preempt the state rule and pay the ex anyway.
After any marriage or divorce, walk every account that carries a designation — employer retirement plans, IRAs, HSAs, life insurance, annuities, and transfer-on-death brokerage and bank accounts — and update them on the same day you update your will.
One titling rule works in your favor: the unlimited marital deduction. A transfer of any size to a US-citizen spouse, during life or at death, is free of gift and estate tax ( IRC §2056, “Bequests, etc., to surviving spouse”, IRC §2523, “Gift to spouse”), which is why couples can shift assets between themselves freely to equalize estates. The exception that surprises people: a non-citizen spouse does not get the unlimited deduction. Lifetime gifts to a non-citizen spouse are capped at an indexed annual amount, and bequests generally require a Qualified Domestic Trust (QDOT) to defer the tax. If your spouse is not a US citizen, consult section “Estate planning” before moving assets.
The other titling decision is invisible until the first spouse dies, when it can cost the survivor hundreds of thousands of dollars. In a community-property state, a taxable investment account held as “community property with right of survivorship” gets a step-up in basis on both halves when the first spouse dies; the same account held as JTWROS gets a step-up on only the decedent’s half. On a long-held appreciated portfolio in California, the gap easily runs into seven figures of unrealized gain — and into six figures of needlessly paid tax. The worked example, and the mechanics of converting separate property into community property to capture the full step-up, are in section “Capital Gains Resets With Inheritance”.