Roth Beneficiary Sequence
If spouse is listed as primary beneficiary on a roth IRA and four sons are listed as contingent beneficiaries – and the spouse and one or all sons decline within the prescribed 9 month period, will the Roth automatically flow through to the respective decendants (children) of the sons who declined? If not, who would receive the Roth? DK
Permalink Submitted by Bruce Steiner on Wed, 2009-03-25 22:22
It depends on what the beneficiary designation says. If this involves a living IRA owner, he/she should make it clear on the beneficiary designation. If this involves a deceased IRA owner, you should consult with tax/estates counsel.
Permalink Submitted by Duane kotsen on Thu, 2009-03-26 20:38
Thanks. Owner is alive (living in Florida), making beneficiary designations for a Roth but 2 major institutions refuse to list tertiary beneficiaries (grandchildren). They state that heirs of the contingent level (i.e. the grandchildren) would split up the Roth if primary and contingent all disclaim. Question is who gets the Roth if both primary (spouse)and secondary(children) beneficiaries disclaim and grandchildren are not specifically listed. DK
Permalink Submitted by Bruce Steiner on Thu, 2009-03-26 21:00
That creates an ambiguity. A living person has no heirs. A person’s heirs are the persons who would inherit from him/her if he/she did not have a Will. There’s no way to determine who they are until the person in question dies.
I would write in the words “See attached rider” in the space provided for naming a beneficiary, and then attach a separate sheet of paper (dated and signed) with the desired beneficiary provisions. If the financial institution balks, I would speak to someone higher up at the financial institution. That usually works. But if not, I would move the account. The last thing you want is an ambiguity.
The attorney handling the IRA owner’s estate planning should be able to handle this.
Bruce Steiner, attorney
NYC
also admitted in NJ and FL