Legal Blog

The Weekly Scenario: No Designated Beneficiary

Question: My uncle died unexpectedly owning several IRAs. The IRA custodians can’t locate the beneficiary designation forms. If no beneficiary forms can be located and I can’t find copies, what happens?


Answer: When there is no beneficiary form, typically the default options in the IRA agreement will determine where the IRA will go. The IRA agreement may say that the spouse is the default beneficiary, or if no spouse, then the children.

Other IRA agreements may say that if there is no designated beneficiary then the IRA passes to the estate of the IRA owner.

Comment: An important thing to note is that if the estate is a beneficiary and the IRA owner dies before age 70 ½, the payout period for the IRA is five years (as opposed to a payout that is based on a potentially longer period over a beneficiary’s lifetime). Also, naming the estate as the beneficiary will likely impact the minimum required distribution calculation.

As always, if you have any questions or would like to learn more, please let me know.

 

ABOUT STEVE SHANE

Steven E. Shane

Steve Shane provides strategic counseling to clients in need of estate administration, charitable giving and business continuity planning while minimizing estate, gift, and generation-skipping transfer tax exposure. He offers legal guidance to clients on asset protection and the proper disposition of assets in accordance with the client’s objectives, while employing tax planning techniques such as the use of irrevocable trusts, life insurance planning, lifetime gifts and charitable trust. He is also experienced with drafting documents for business planning, the incorporation and application for exemption for Private Foundations and the administration of decedents’ estates.

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