A person might want to consider naming a contingent beneficiary on his or her IRA form. The contingent beneficiary will be the next person to receive the funds of that person’s IRA if the primary beneficiary dies before the owner of the IRA. It is important that the owner of the IRA name both the primary and contingent beneficiary in his or her IRA designation form while that person is still alive. The owner of the IRA want to do this so that if the primary beneficiary were to die, the owner could “take advantage of after-death estate planning and disclaimer opportunities available under the IRA rules.” A person might also want to check his or her IRA frequently and update his or her beneficiary forms when needed. If there is no beneficiary to take under the IRA, then the estate will become the primary beneficiary and it will be subject to probate. This could subject the funds in the IRA to legal costs.
See Joe Cicchinelli & Jared Trexler, Naming Contingent Beneficiaries of Your IRA is a Good Idea, The Slott Report, Aug. 28, 2012.
Special Thanks to Brian J. Cohan for bringing this article to my attention.
