Deceased mother left IRA without named beneficiary
My neighbor passed away at age 86 earlier this year and left several Traditional IRA’s without named beneficiaries on them. Her surviving daughter is the named beneficiary of her assets via her will. Can an inherited IRA still be established for the benefit of the daughter and, if so, what are her distribution options? If not, is her only option to have a the assets distributed in a taxable transaction?
Permalink Submitted by mk foss on Tue, 2010-06-22 16:50
The agreement for each IRA should indicate who is the default beneficiary when none is named. Generally for a single person, it is the IRA owner’s estate. The IRA’s would be part of the probate estate of the mother to be distributed with the rest of the assets. The daughter as the sole beneficiary could establish an inherited IRA for the IRAs. There have been private rulings showing that the executor can assign the IRAs from the estate to the beneficiary IRA as part of the wrap up of the estate.
The bad news is that the life expectancy to be used is that of the mother and not the daughter.
You’d think that custodians would have some provision to REQUIRE that all IRAs have a beneficiary.
Permalink Submitted by Bruce Steiner on Tue, 2010-06-22 20:59
Some IRA agreements do indeed provide for default beneficiaries. It may be worth checking to see if this one does.