“Custom” Beneficiary Designation for Traditional IRA
A client who’s the owner of a traditional IRA is requesting a “customized” beneficiary designation for his IRA. Currently his wife is the primary beneficiary, and three kids are contingent beneficiaries. The client is past RMD age.
The client wants to mandate that his wife (and contingent beneficiaries) follow the same beneficiary designations that he currently has in-place for the IRA if they survive him. We suggested he work with his attorney draft a trust to be the beneficiary if he wants to dictate the distribution of the IRA after his death, which he’s reluctant to do.
Has anyone encountered instances in which an IRA owner has been allowed to dictate who the spousal beneficiary or other beneficiary names as successor beneficiaries are after death?
Permalink Submitted by Alan - IRA critic on Thu, 2024-06-20 18:27
Don’t know of any. Trusts have commonly been used for this purpose, particularly when the IRA owner wants to protect his children from a prior marriage. With a trust, many more controls could be imposed than just securing the interests of the successor beneficiary, such as how much the designated beneficiary can withdraw, creditor protections of a trust etc.