Who Inherits an IRA: Spouse or Beneficiary?

Inheriting IRAs and Other Accounts

In most cases, the person(s) named as beneficiaries on an Individual Retirement Account (IRA) will inherit the funds. This is determined by the law and takes precedence over any provisions made in the deceased owner’s will or trust. The same principle applies to other accounts that allow the designation of beneficiaries, such as retirement plans, life insurance policies, and accounts referred to as “Transfer on Death” in some states.

Understanding Elective Share

However, it is important to consider the concept of an “elective share.” In certain states that follow separate property laws, a surviving spouse may be entitled to a portion of their deceased spouse’s estate through the elective share. Community property states operate under different rules.

Again, it is crucial to consult with a competent estate planning attorney for precise information and advice in your specific situation.

Elective Share Statutes: Protecting Surviving Spouses

Elective share statutes serve an important purpose in preventing the complete disinheritance of a surviving spouse. While there may be valid reasons for not directly leaving funds to a surviving spouse, these laws ensure that they are not left without any financial support. It is crucial to understand the implications of these statutes, especially in situations where a surviving spouse possesses substantial assets of their own and may not require or desire an inheritance.

Planned Disinheritance: A Complicated Scenario

One frequent scenario where elective share statutes come into play is when a marriage involves at least one spouse who has children from a previous relationship. In such cases, arrangements can be made to allocate the inheritance to these children either immediately or through a trust after the passing of the surviving spouse.

It is important to note that elective share statutes vary significantly from state to state, even with the existence of the Uniform Probate Code. These laws do not treat all types of assets equally, adding complexity to the situation. Particularly, the portion of an IRA that a surviving spouse, who is not named as a beneficiary, may receive via an elective share can vary significantly depending on the jurisdiction.

If you have any questions regarding this topic, please feel free to contact Dan via email with ‘Q&A’ mentioned in the subject line.

As a recognized financial planner at Moisand Fitzgerald Tamayo, Dan Moisand has been providing his expertise to clients all across the nation. With offices in Orlando, Melbourne, and Tampa Florida, he has gained a reputation for offering valuable advice.

Providing Expertise for Informed Decisions

It’s important to note that the comments provided by Dan Moisand are purely informational in nature. They should not be considered a substitute for personalized advice. It is highly recommended that you consult with your own financial adviser to determine the best course of action for your specific needs and goals.

Addressing Reader Questions

In order to present the subject matter in a clear and concise manner, certain reader questions have been edited for improved clarity.

Remember, seeking the guidance of a qualified professional is crucial when making important financial decisions. By doing so, you can ensure that you have access to personalized advice tailored specifically to your unique circumstances.

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