Divorced Dad naming Bene’s of Roth IRA
Hello. I have a client who became divorced from his wife earlier this year. I asked him if he wanted to change the beneficiary of his Roth IRA. He said that they have an agreement in the divorce documents that allows them to still list each other as beneficiary of their Retirement Accounts and Life Insurance, but knowing the money has to really be for the kids, since they are minors. What do you suggest in this situation? Could the kids be named as primary beneficiaries, and they he could setup rules in his will dictating who would oversee the money until the kids are of legal age?
Permalink Submitted by Alan - IRA critic on Thu, 2014-07-10 22:49
He could name the children as beneficiaries and appoint a financial guardian in this will or could establish a trust for the children if the Roth is large enough to warrant one and make the trust the beneficiary of the IRA. If the trust is qualified, the RMDs would be based on the age of the oldest child. Otherwise, there is no guarantee the funds would be used for the benefit of the children.