IRA Beneficiary (primary/secondary) w/trusts

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schachtw
Posts: 249
Joined: Mon Jul 06, 2015 6:15 pm

IRA Beneficiary (primary/secondary) w/trusts

Post by schachtw »

My wife and I currently have IRAs where each spouse is the primary beneficiary for the other’s IRA. Similarly, for the secondary beneficiary each spouse’s revocable trust is the secondary beneficiary for the other’s IRA.

My question is (I would imagine this scenario happens all the time):

When the first spouse passes who should then become the primary beneficiary of the IRAs? Should it be our son, or the remaining spouse’s trust?

I’m aware all family/estate circumstances are different, however, is there a “best practice” approach to this scenario?

Any insight is appreciated.
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CAsage
Posts: 4251
Joined: Sun Mar 27, 2016 6:25 pm

Re: IRA Beneficiary (primary/secondary) w/trusts

Post by CAsage »

When the first spouse passes, it's usual for the surviving spouse to transfer the deceased spouse's IRA into their own names - something you can do as a spouse but not any other heir. Then, it's completely up to the surviving spouse to update the beneficiary. I do not think that there is anything "automatic" about it. I will note, this is a good time to decide whether other heirs should be considered as a fraction of primary, for example 50% to my Wonderful Spouse and 50% to (other loved ones). Trusts and IRA are messy, from what I hear, and need to be very carefully considered due to taxation issues (such as higher rates and faster requirements to liquidate). Research!

https://www.bogleheads.org/wiki/Inheriting_an_IRA
Salvia Clevelandii "Winifred Gilman" my favorite. YMMV; not a professional advisor.
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