Multiple Primary Beneficiaries
I have a client whose attorney wishes to name her husband (75%) and some charities (25%) as primary beneficiaries. The attorney goes on to name some charities and friends as the contingent beneficiaries (which are different than the charities in the primary).
My concern is this. Should the husband and wife pass together, it is my understanding that the remaining primaries (originally allocated 25%) would receive the entire proceeds and the contingent beneficiaries are never considered.
Am I correct in this assumption? Thanks…Tim
Permalink Submitted by Alan - IRA critic on Wed, 2013-10-30 21:42
While cases where the order of death cannot be determined are extremely rare, should this situation occur, the first place to look is the IRA agreement itself, as the IRA custodian is allowed to state what will happen if the order of death cannot be determined. If the agreement is silent, then look to the state’s version of the Uniform Simultaneous Death Act that applies. In the most recent version (1993 I believe), this Act would consider that the beneficiary pre deceased the IRA owner. In your client’s case, since there is another primary beneficiary (the charity), the charity would receive 100% and the contingent’s nothing. However, should the client name her spouse as primary “per stirpes” then his children if any would receive his 75% share and not the primary charity. And if there was no charity named as primary here and no per stirpes for the spouse, then the contingents would inherit the IRA.
Permalink Submitted by Bruce Steiner on Wed, 2013-10-30 23:27
Make it clear in the beneficiary designation what happens, so as to avoid a possible contest.