Long Island Estate Planning: Choosing an IRA Contingent Beneficiary

May 11, 2016
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Have you named a contingent beneficiary for your IRA or other retirement account? An article on WealthManagement.com highlights the importance of naming a contingent beneficiary in the event that the primary beneficiary passes before the account owner does. In the case described in the article, the surviving spouse was NOT the beneficiary, and the listed primary beneficiary predeceased the IRA owner. Because the primary beneficiary predeceased the owner and there was no contingent beneficiary named, the IRA owner’s estate became entitled to the IRA. In most cases, “if there is no beneficiary chosen by the IRA owner, the IRA death benefits will be paid to the IRA/Roth IRA owner’s estate.” The surviving spouse was the beneficiary and executor of the decedent’s estate so she became entitled to proceeds of the accounts. Ultimately, the finding was that the decedent’s IRA could be rolled over into her own account. Although the surviving spouse was able to rollover the account based on an IRS “private letter ruling”, the process would have been made easier, faster and less expensive if she had been named the contingent beneficiary of the accounts to begin with.
Making sure that all aspects of your financial and estate planning documents are completely covered is the best way to ensure that your wishes will be carried out in the least amount of time and with the least amount of cost.

Like all estate planning documents, beneficiary forms should be reviewed and verified every few years so as to keep them up to date.

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