diff --git a/escrow/src/lib.rs b/escrow/src/lib.rs
index 5ca65939..f1817fc4 100644
--- a/escrow/src/lib.rs
+++ b/escrow/src/lib.rs
@@ -821,6 +821,16 @@ pub struct MaturityUpdatedEvent {
     pub new_maturity: u64,
 }
 
+#[contractevent]
+pub struct BeneficiaryRotated {
+    #[topic]
+    pub name: Symbol,
+    #[topic]
+    pub invoice_id: Symbol,
+    pub old_sme: Address,
+    pub new_sme: Address,
+}
+
 #[contractevent]
 pub struct AdminTransferredEvent {
     #[topic]
@@ -3333,11 +3343,13 @@ impl LiquifactEscrow {
                     escrow.yield_bps,
                 );
                 Self::set_persistent_investor_claim_not_before(&env, investor.clone(), 0u64);
+                tier_lock_secs = 0;
             } else {
                 // Returning investor: yield was set on first deposit; read it for the event.
                 investor_effective_yield_bps =
                     Self::get_persistent_investor_effective_yield(&env, investor.clone())
                         .unwrap_or(escrow.yield_bps);
+                tier_lock_secs = 0;
             }
             // If prev > 0, preserve existing effective yield and claim lock
         } else {
@@ -3926,6 +3938,42 @@ impl LiquifactEscrow {
         }
     }
 
+    /// Update the SME beneficiary address via dual consent (current SME and admin).
+    ///
+    /// Allowed only in non-terminal states (0 = open, 1 = funded).
+    /// Invariant: after rotation, only the new SME may withdraw/settle.
+    pub fn rotate_beneficiary(env: Env, new_sme: Address) {
+        let mut escrow = Self::get_escrow(env.clone());
+
+        ensure(
+            &env,
+            escrow.status == 0 || escrow.status == 1,
+            EscrowError::RotateBeneficiaryNotOpen,
+        );
+
+        escrow.sme_address.require_auth();
+        escrow.admin.require_auth();
+
+        ensure(
+            &env,
+            escrow.sme_address != new_sme,
+            EscrowError::NewSmeSameAsCurrent,
+        );
+
+        let old_sme = escrow.sme_address.clone();
+        escrow.sme_address = new_sme.clone();
+
+        env.storage().instance().set(&DataKey::Escrow, &escrow);
+
+        BeneficiaryRotated {
+            name: Symbol::new(&env, "BeneficiaryRotated"),
+            invoice_id: escrow.invoice_id.clone(),
+            old_sme,
+            new_sme,
+        }
+        .publish(&env);
+    }
+
     /// Propose a new admin (`PendingAdmin`) — step 1 of a two-step handover.
     ///
     /// Requires current admin authorization. The destination must differ from the current admin.
diff --git a/escrow/src/tests/admin.rs b/escrow/src/tests/admin.rs
index 762446c3..0ad8966f 100644
--- a/escrow/src/tests/admin.rs
+++ b/escrow/src/tests/admin.rs
@@ -282,6 +282,84 @@ fn test_transfer_admin_same_address_panics() {
     client.propose_admin(&admin, &None);
 }
 
+#[test]
+fn test_rotate_beneficiary_success() {
+    let env = Env::default();
+    let (client, admin, sme) = setup(&env);
+    let new_sme = Address::generate(&env);
+    let invoice_id = soroban_sdk::String::from_str(&env, "ROT001");
+    client.init(
+        &admin,
+        &invoice_id,
+        &sme,
+        &TARGET,
+        &800i64,
+        &1000u64,
+        &Address::generate(&env),
+        &None,
+        &Address::generate(&env),
+        &None,
+        &None,
+        &None,
+        &None,
+        &None,
+    );
+
+    client.rotate_beneficiary(&new_sme);
+    let updated = client.get_escrow();
+    assert_eq!(updated.sme_address, new_sme);
+}
+
+#[test]
+#[should_panic(expected = "HostError: Error(Contract, #81)")]
+fn test_rotate_beneficiary_same_address_panics() {
+    let env = Env::default();
+    let (client, admin, sme) = setup(&env);
+    client.init(
+        &admin,
+        &soroban_sdk::String::from_str(&env, "ROT002"),
+        &sme,
+        &TARGET,
+        &800i64,
+        &1000u64,
+        &Address::generate(&env),
+        &None,
+        &Address::generate(&env),
+        &None,
+        &None,
+        &None,
+        &None,
+        &None,
+    );
+    client.rotate_beneficiary(&sme);
+}
+
+#[test]
+#[should_panic(expected = "HostError: Error(Contract, #82)")]
+fn test_rotate_beneficiary_wrong_state() {
+    let env = Env::default();
+    let (client, admin, sme) = setup(&env);
+    client.init(
+        &admin,
+        &soroban_sdk::String::from_str(&env, "ROT003"),
+        &sme,
+        &TARGET,
+        &800i64,
+        &1000u64,
+        &Address::generate(&env),
+        &None,
+        &Address::generate(&env),
+        &None,
+        &None,
+        &None,
+        &None,
+        &None,
+    );
+    // Cancel the escrow so it's in a terminal state
+    client.cancel_funding();
+    client.rotate_beneficiary(&Address::generate(&env));
+}
+
 #[test]
 #[should_panic]
 fn test_transfer_admin_uninitialized_panics() {