Irrevocable spousal beneficiaries
Is there a way for a married couple to leave a retirement account to a surviving spouse and lock in the beneficiaries of the living spouse, but still allow the surviving spouse to treat the account as their own and the ultimate beneficiaries will be able to use their own life expectancy payout.
A Trust would require the surviving spoue to use their life expectancy, but is there a way for the deceased spouse to choose the beneficiaires and the surviving spouse can still treat the account as their own giving the ultimate beneficiary the right to liquidate using their own life expectancy.
Permalink Submitted by mk foss on Thu, 2013-12-26 19:40
There is no way to lock in the beneficiaries after the spouse has passed away other than using a trust. If the spouse is named as beneficiary, she can do a rollover and name new beneficiaries. If the spouse does not do a rollover, he/she is the only one to determine who gets remaiing benefits after his/her death. Natalie Choate recommended that the IRA owner name the “other beneficiaries” to receive a portion of the benefits immediately with the rest in a trust or outright to the spouse when asked a similar question. That’s the only way you can be certain that those beneficiaries will receive benefits.
Permalink Submitted by Andrew Tignanelli on Thu, 2013-12-26 21:15
Merrill Lynch seems to imply that their Self Trusteed IRA will do this, but I have been skeptical and want to see if other’s opinions are.
Permalink Submitted by Bruce Steiner on Thu, 2013-12-26 22:44
One possibility, as Mary Kay suggests, is leaving some to the spouse and some to or in trust for others.Another possibility is a trust, but for the reasons set forth in an article on this that I wrote for the September 2009 issue of Trusts & Estates, preferably one created in your Will (or in a separate trust instrument) rather than Merrill Lynch’s trusteed IRA: http://www.kkwc.com/library_cat/uf_trusteed_IRA.pdfA third possibility is a postnuptial agreement, though it may not be easy to monitor compliance with it.