Dispute over IRA proceeds

[nickjames]

What is the name of your state? TX

A husband has an IRA where he designates his wife as a primary beneficiary entitled to 55% and his child as a secondary beneficiary entitled to 45%. Husband and wife divorce, thus invalidating the wife's designation per the IRA agreement. Husband never redesignates a beneficiary to take over the 55%. Husband thereafter remarries and then dies. The widow is arguing that she should receive the 55% since the ex-wife's share is void. The child is arguing that the 55% passes to her because she is a surviving beneficiary. The widow is stating that by allocating the percentage of 45% to the daughter, the decedent intended to limit her distribution to that amount. The daughter is arguing that the decedent could have redesignated the new wife as beneficiary and never did and that the 45% is no longer applicable since the ex-wife's share is void. Any thoughts on who is right?

 

[Dandy Don]

IRA's have their own rules and regulations and you need to be talking to the company holding the IRA to find out who is correct.

 

[fairisfair]

what happens to your IRA if your spouse predeceases you or if you have since divorced?


If you name your spouse as your beneficiary but he or she dies before you do, the IRA would flow to the person you named as the secondary or contingent beneficiary. Without an alternate beneficiary in place, the IRA provider must pay the balance to your estate.

The loss of a primary beneficiary due to divorce or death highlights the importance of two things: reviewing your choices periodically, and naming a secondary or contingent beneficiary at the time you designate the primary. In the first instance, by completing a new beneficiary election form, you can name a new primary beneficiary as well as a new secondary or contingent beneficiary. In the second case, if you die before making a change based on a primary beneficiary's earlier demise, the secondary or contingent beneficiary (such as a child) will automatically get your IRA balance as desired.