Contingent beneficiary at 2nd death goes to charity or does it?

Submitted by Doug Hesse on Tue, 2016-08-16 14:04

Client has $1,000,000 IRA.
His age 75
Her age 68.
She is first beneficiary and they want the contingent to go to National Christian Foundation (donor advised fund)
Question: If he dies first and she dies shortly after him, but does not make any changes to the IRA, will the charity get the proceeds?
Since it goes to her as an inherited IRA, and if she doesn’t have time to do anything with the beneficiary forms will the charity still get the money? Or does it go to their wills since she didn’t make any changes?
One IRA is a Prudential annuity and Pru says it goes to the charity.
Another IRA is with Fidelity and I haven’t been able to get an answer from them yet.
However, his attorney says it goes to the estate because she didn’t make any changes to the inherited IRA.

What is correct?



Submitted by Alan - IRA critic on Tue, 2016-08-16 20:18

  • Attorney would be correct with a typical IRA agreement. An IRA annuity however is more likely to have some special beneficiary clause, so that clause needs to be carefully examined very soon. For the Fidelity account if she dies without taking any action, her estate will likely become the beneficiary of her interest, so the will beneficiaries would be critical. If she should die without taking action, it is often possible for her executor to file a post death disclaimer by the 9 month deadline and that would result in the charity becoming the beneficiary of his IRA.
  • As for Pru’s contention, that needs to be checked through the IRA agreement or higher level death benefits staff. The contingent beneficiary charity was named by the IRA owner, and the charity does not continue to be  her beneficiary after his death unless the IRA agreement so specifies. Normally, the contingent beneficiary becomes void if the primary beneficiary is still living upon owner’s death, barring a disclaimer by her executor. There are state by state variations regarding these disclaimers.

Add new comment

Log in or register to post comments

Sign up to receive The Slott Report each week