A client referred by a CPA called because there was a problem with the beneficiary designation made by the deceased father. An 81 husband/father passed away last month and he listed his two children as primary beneficiary of his $260,000 IRA. No contingent beneficiary was named and the Schwab IRA agreement states that if no beneficiary is named, then the IRA will automatically pass to the estate. Apparently, it was the desire of the deceased father that his IRA account pass to his wife, who is now 80 years old, of the two children….and the children are on board with this.

I was going to first recommend that the children disclaim their rights to the IRA so the IRA would then have no beneficiary, and we were then hoping that the IRA document would default to having the surviving spouse be primary beneficiary. Since the estate is the default, what options do the children have to try and rectify this situation so the mother can be made primary beneficiary so she can treat the IRA as her own?

My understanding is that there have been PLR allowing a beneficiary to disclaim and then have the IRA pass through the estate to the surviving spouse, but it doesn’t seem worth the headache and cost of a PLR for a $260,000 IRA.

Based on the children’s longer life expectancy I don’t think it is such a bad thing that they are primary beneficiary because their RMDs will much smaller than their 80 year old mother, but apparently the mother/wife would feel better having control over the entire account, if possible.

Any suggestions?