[WSBAPT] Default Beneficiary of IRA

[Terry Tassin]

Phil, the 3rd default was probably children - that's the three I see.

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Terry J. Tassin, Jr.
Scarborough McNeese Oelke & Kilkenny, P.C.
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tjt at smoklaw.com<mailto:tjt at smoklaw.com>

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From: wsbapt-bounces at lists.wsbarppt.com [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of Philip N. Jones
Sent: Monday, November 04, 2019 10:25 AM
To: WSBA Probate & Trust Listserv
Subject: Re: [WSBAPT] Default Beneficiary of IRA

To elaborate on Diane's post, I suggest you ask for a copy of the custodial agreement or the plan, whichever one has the default clause.  It will explain the default beneficiary.  Don't look for a set of internal rules or an internal policy; look to the contract.
I saw a study once that contacted a variety of IRA custodians.  The default clauses varied from custodian to custodian.  Some went to spouse.  Some went to estate.  Some went to a third place that I cannot remember.  But I do recall that the contracts were somewhat evenly divided 33/33/33 among the three different destinations.   Call your custodian.
Phil Jones
Portland, OR

From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of Diane J. Kiepe
Sent: Monday, November 04, 2019 9:15 AM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] Default Beneficiary of IRA

Michael,

Yes - an IRA is a contract and the default beneficiaries of the plan typically govern.  The no beneficiary is if there is truly "no beneficiary".  Here is this - it is by contract.

Best,


Diane J. Kiepe

Diane J. Kiepe
Douglas Eden
717 W. Sprague Ave.
Suite 1500
Spokane, WA  99201
djkiepe at depdslaw.com<mailto:djkiepe at depdslaw.com>
509-455-5300



From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> <wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com>> On Behalf Of Michael Geoghegan
Sent: Monday, November 4, 2019 8:48 AM
To: wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>
Subject: [WSBAPT] Default Beneficiary of IRA

Hi All,

Here's my question:
Where the Primary Beneficiary of an IRA does not survive the decedent, can the company managing the IRA use defaults to determined the contingent beneficiary or must the IRA revert to an "Inherited IRA in the name of the Estate"?

I am working on an estate where the decedent did not properly name contingent beneficiaries to his tax deferred retirement accounts.

Decedent left an IRA with just shy of $1M. Primary beneficiary is the testamentary "Marital Trust," established l only if spouse survives him. Spouse did not survive him so the Marital Trust does not exist.

There is no Contingent Beneficiary named to receive the IRA.

I consulted Natalie Choate's book and determined that the the IRA account should be treated as "No Beneficiary" and default to an Inherited IRA in the name of the Estate.

Today I learned that the custodian of the IRA account has its own internal default rules if Primary Beneficiary is not available to inherit the IRA -- 100% to spouse or 100% divided among then-living children if spouse is not alive.  This is not in line with the inheritance scheme of decedent's estate.  Is there a legal basis for such a policy?

(The after the Marital Trust, the will establishes a "Family Trust" to manage tax deferred retirement funds, RMDs to be split 5 ways. I infer the intent of the Family Trust was to prevent decedent's only child from immediately cashing out an Inherited IRA.)

-Michael



Michael Geoghegan
Northwest Strategy and Planning, PLLC
t: 206.353.5592
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