IRA – Beneficiary predeceased owner

Submitted by William Eidson on Fri, 2020-01-10 03:23

Hi,

My mom recently passed at age of 81. Her will splits her estate per stripes to my brother and I. Her largest asset was a IRA with my brother and I as beneficiaries 50/50. Unfortunately, my brother predeceased her a few years ago and she did not amend her IRA. Fidelity says it all goes to me. That is clearly not what was intended and would like to understand options regarding this situation. My mom would have wanted it to go to my brothers daughter at least. Does disclaiming 50% of the IRA -> to the estate??? do this? Any suggestions on strategy would be awesome.

Thanks in advance



Submitted by Bruce Steiner on Fri, 2020-01-10 04:04

  • If she wanted your niece to get your brother’s share if he predeceased her, she could have said so in the beneficiary designation form.  Almost all of our clients would do that.
  • Disclaiming could get half of the IRA to your niece, but without the stretch.  If you want to get half of the IRA to your niece, you could take the required distributions each year and give her half of each year’s distribution net of income taxes.  If that would be more than $15,000 a year ($30,000 a year if you’re married), and there’s a chance you might have a taxable estate, you could make some of the gifts to her spouse (if she has one) and her chlidren and grandchildren.
  • Bruce Steiner


Submitted by Alan - IRA critic on Fri, 2020-01-10 04:16

You would have to disclaim 50% of the IRA and also disclaim a portion of the estate because you cannot acquire portion of what you disclaimed from the IRA by virtue of the IRA disclaimer. This will definitely take an estate lawyer to draft the disclaimers properly and avoid an unanticipated result.  If the IRA balance was low enough you could probably make annual gifts to his daughter, but that would be an on going burden every year.



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