IRA Beneficiary Question

Submitted by Kevin O'Hearn on Wed, 2023-10-25 15:45

Hello,

I have a client that has passed and never updated their beneficiary information to add his spouse as the primary. If all the current beneficiaries disclaim the assets within 9 months would the default beneficiary be the deceased client’s estate or could the spouse become the default beneficiary option?

Thank you.



Submitted by Alan - IRA critic on Wed, 2023-10-25 16:03

  • Depends on the default beneficiary provisions in the IRA agreement for this particular custodian. This agreement should be reviewed carefully. And if even one designated beneficiary does not disclaim, that beneficiary would inherit the plan. It might be challenging to have several beneficiaries separately filing disclaimer forms, and there is a 9 month deadline from the date of death. Someone would probably have to collect these forms and submit them together, while consulting with the custodian.
  • If the balance of the account is small, it might be easier to have the beneficiaries not disclaim, take distributions and gift the tax adjusted amount to the spouse.

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