IRA Beneficiary

Submitted by ShipsnGiggles on Thu, 2017-07-20 12:29

I have what I thought was a rather straightforward question. However I am receiving conflicting answers.

IRA owner named his spouse has sole primary beneficiary then got divorced. He neglected to update his beneficiary form. Upon his death his (now ex-spouse) remained as primary beneficiary – Unfortunately all too common occurrence

Question:
Is the beneficiary treated as a non-spouse beneficiary due to her being a former spouse upon her ex husbands death)? Or a non-spouse beneficiary?

Thank you



Submitted by Ben Meyer on Thu, 2017-07-20 16:56

The former spouse is not a surviving spouse, but a divorce settlement may have some provision that applies.  However, the laws of some states may void a beneficiary designation in the event of a divorce.  Who is making a claim?  Is it a contingent beneficiary?  Or the estate?

Submitted by ShipsnGiggles on Sun, 2017-07-23 18:26

retitied the accout as a spousal IRA.  The custodian is not budging.The state of residence is North Carloina Thank you 

Submitted by Ben Meyer on Sun, 2017-07-23 19:07

  • There are two questions here.  The first, regarding the successor to the account, sounds correct since a new beneficiary was not named following the divorce.  The second question, whether the account should be a spousal account or an inherited account, was a judgement call by the custodian.  The only effect will be how the former spouse takes RMDs or possibly rolls the account into her own IRA.  Any consequences will be between the custodian, the former spouse, and the IRS.  This all assumes that the divorce became final before the account holder passed.   
  • The estate should not be involved except to include the account value at the date of death in the estate valuation if an estate tax filing is required.

Submitted by Alan - IRA critic on Sun, 2017-07-23 21:29

One source I read does NOT list NC as one of the states with a revocation statute for non probate assets, but divorce decree provisions could still affect the beneficiary. Also, the title on an inherited IRA does not normally include the spouse vs. non spouse character of the beneficiary, so how is it determined that the custodian considered the beneficiary to be a spouse?  

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