IRA Disclaimer
What is the general protocol for an IRA Disclaimer. A person over 70 1/2 passed away and named her two son’s as primary beneficiary (50/50 each). No contingent was named. One son wants to disclaim his share of the IRA. What is the protocol for handling this? Does his 50% share now go through probate?
Thank you!
Permalink Submitted by Bruce Steiner on Mon, 2008-10-13 20:15
The lawyer handling the estate, or some other lawyer selected by the disclaimant, prepares the disclaimer. The disclaimant signs it. Depending on state law, the disclaimant, or as a practical matter his/her lawyer on his/her behalf, may have to file it with the court, and may have to notify the executor, the persons whose interests are increased, and the IRA custodian. State law may prescribe the form in which the required notices are given.
Disclaimers are routine. The attorney handling the estate (or any other tax/estates attorney) should be familiar with them.
The beneficiary designation form will control who gets the disclaimed portion. Most likely, if there are no contingent beneficiaries, it will go to the other son. But I haven’t seen the beneficiary designation form. Take a look at it before doing the disclaimer.
Bruce Steiner, attorney
NYC
also admitted in NJ and FL
Permalink Submitted by Janine Janine on Tue, 2008-10-14 17:43
Since no contingent beneficiaries were named, is it possible that the disclaimant assumes that his/her children would become the beneficiary of his/her share?
Permalink Submitted by Al Fry on Tue, 2008-10-14 18:24
Clients make many improper assumptions when they don’t seek competent legal advice.
Permalink Submitted by Jonathan Sard on Tue, 2008-10-14 20:33
I did not see any verbiage in the IRA agreement addressing what happens if someone disclaims. Since only the two son’s were named as beneficiary, wouldn’t the proceeds, after one son disclaims, have to go to the other son since there is no other beneficiary (neither son is married and neither son has children)? Does this action go through probate?
Permalink Submitted by mk foss on Wed, 2008-10-15 23:37
You don’t look for an explanation in the IRA custodial agreement for disclaimers, you look to see what happens if one of the named beneficiaries predeceases the owner.
Permalink Submitted by Jonathan Sard on Thu, 2008-10-16 12:02
No beneficiary predeceased the owner. The two brother’s were primary beneficiaries and one brother wants to disclaim. Does this action go through probate?
Permalink Submitted by Al Fry on Thu, 2008-10-16 15:14
When one brother disclaims, it is treated the same as if he predeased owner, that is why the agreement should be looked at. If it is per capita (share and share alike) v. per stirpes, the other brother would get the entire IRA.
Permalink Submitted by charles lore on Fri, 2008-10-17 01:20
In summary when you disclaim your treated as is you are dead. You cant say I dont want it but give it to Joe, or Jim. You cant redirect. You can disc laim all or part. Also you cant have touched the money. The only exception is to receive a required distribution the ower would have taken had he lived. Im not sure if this exception is for a spouse only// Anyone know?