Successor Beneficiary for IRA
A client died a month ago at the age of 91 and his 90 year old spouse was the primary beneficiary, while their three children were listed as contingent. Our strategy was to change the titling on the IRA to be the wife’s IRA and then to name the three children as her primary beneficiaries; however, in waiting for the death certificate, the 90 year old wife is now in the hospital and not expected to make it past the next 24-48 hours. As a result, the IRA is still in the deceased’s husband’s name and now it looks like his original primary beneficiary will pass away in the next day or two. Given these unforeseen circumstances, will the three children still be able to be treated as beneficiary when the wife passes away in the next day or two?
Thank you!
Permalink Submitted by Alan - IRA critic on Wed, 2016-06-01 21:13
If she passes before either completing either disclaimer paperwork or rollover instructions with the children as beneficiaries, there will be issues for the children. The worst one is that the children are no longer beneficiaries at all because mother did not pre decease father, leaving her with an inherited IRA without a sucessor beneficiary named. The IRA would then go to her estate unless perhaps her executor could disclaim on her behalf. If children have a POA authorizing them to name beneficiaries on her rollover IRA request, that would also solve the problem. But if she could only complete papers naming them as successor beneficiaries, their stretch would be limited to around 5 years, which is her remaining life expectancy. Right now it is not clear whether the custodian would accept rollover papers with processing contingent on his death certificate. But there is no time left to try to get an answer from the custodian, so it might be best to proceed assuming the custodian will comply with a rollover request once the death certificate is available.
Permalink Submitted by Bruce Steiner on Thu, 2016-06-02 02:26