Let’s say A has a Traditional IRA and names B as beneficiary but no successor. Let’s say B pre-deceases A and A never updates his IRA for a new beneficiary. When A dies, will the proceeds of the IRA go into A’s estate to be distributed per A’s will (or the State’s order of succession) or will the proceeds be distributed to the heirs of B?
Thanks
BruceM
Thanks….that’s what I was interested in.So it really depends on how the beneficiary clause is structured and how it directs the IRA to pay. As you say, if it identifies B and then directs the IRA per stirpes to B’s decendents, then that keeps it out of probate. But if the clause is silent on this and only lists B, then the default on the death of B will be probate. I would assume that both State law on succession, if any, and the custodian’s policies would play into how this is structured?
Yes, the clause cannot conflict with state law, but I expect that if B is named without per stirpes, etc, and pre deceases A, the IRA would almost always go to A’s estate.
Some IRAs default to the estate. Some default to the spouse, or if none then to the estate. Some default to the spouse, or if none then to the issue, or if none then to the estate. What does this one provide?
Permalink Submitted by Alan - IRA critic on Fri, 2021-04-30 00:36
The IRA agreement beneficiary clause must always be checked for default beneficiaries such as a spouse. If none, the IRA would go to the A’s estate. This scenario would be avoided if B was named “per stirpes”, “per capita” etc as the IRA would instead go to B’s heirs.