Periodically checking and updating beneficiary designations on retirement accounts and life insurance is prudent.

The next time you navigate the online portal or the old school paper form to write in your updated beneficiary selection, look a little harder at some options you may have previously overlooked.

Often, the beneficiary selection is paired with a radio button (online) or a checkbox (paper) that allows you to choose if the distribution is per stirpes or pro rata. Which should you choose?

Both phrases are Latin and concern how your wishes will be carried out if you are predeceased by a beneficiary.

Per stirpes would direct that the deceased beneficiary’s designated share would pass equally to the decedent’s children (split equally). Pro rata directs that the deceased beneficiary’s share be cancelled and instead split among the remaining named beneficiaries.

Let’s use an example to highlight the different options available.

Assume a married couple (Stan and Cheryl) with two kids (Jane and Phil) who both have three children (so six total grandchildren).

Stan might then select beneficiaries on his $150,000 Individual Retirement Account (IRA) as follows: his wife (Cheryl) as the primary beneficiary and his two children (Jane and Phil) as the contingent beneficiaries, each receiving half of the total.

Assume then that the family faces an unimaginable tragedy: Stan, Cheryl and Jane all die in a devastating car accident.

Here is where the selection made on the beneficiary designation paperwork becomes vital as it determines where the $150,000 is distributed.

In the event Stan chose per stirpes, then 50% of the IRA (or $75,000) would go to the surviving child, Phil.

The remaining $75,000 would be split between Jane’s three children, or $25,000 each. If Stan selected pro rata, the amount going to Jane would be forfeited and the entire account distributed to Phil as the only surviving child.

I have had the opportunity to work with many grandparents contemplating this option.

The vast majority usually end up choosing the per stirpes option since choosing pro rata would effectively disinherit the grandchildren left without a parent.

Our legal default options are often driven by cultural values and attitudes.

Those same cultural values and attitudes can change from state to state, but more significantly from country to country. One can imagine the default inheritance rules being much different in the United States than in Saudi Arabia or Senegal.

Here in Washington state, the default rule is generally per stirpes for distributions to family members for both testamentary gifts (via a will) as well as for those that pass without a will (intestacy).

However, be aware that default rules for the custodians of the asset (retirement plan or life insurance companies), with whom beneficiary designations are made, might have markedly different default rules.

Sometimes there’s good reason to choose pro rata over per stirpes. Sometimes, the grandparent doesn’t want assets going to some or all grandchildren. And that’s OK.

It’s the grandparents’ decision after all. Still, my anecdotal evidence suggests again that selecting per stirpes is much more popular for most grandparents.

As the grandparent ponders all the “what if” scenarios when deciding which option to make, sometimes they might wonder whether a child’s spouse should inherit the assets instead of the grandchildren in the event of the child’s death.

That can certainly be the chosen option. But, as the grandparent usually has the overriding goal of providing for the beloved grandchildren, a gift instead to the surviving spouse can possibly present a challenge.

If the asset is given to a surviving spouse, that same spouse might later remarry and gain additional children through marriage or by birth resulting in the potential for different priorities for the surviving spouse and the inherited assets than the grandparent intended.

Life changes happen and beneficiary designations should be reviewed regularly. Luckily, updating beneficiary designations is easy.

As a cautionary note, one should never rely on default rules. Naming the exact beneficiary designations desired is always best as there can be specific tax benefits versus relying on default distribution rules.

Beau Ruff, a licensed attorney, is the director of planning at Cornerstone Wealth Strategies, a full-service independent investment management and financial planning firm in Kennewick.