Spouse or Estate Inherits the IRA?

[Guest bsf]

OK. We have the owner of an IRA who opens the account and designates no beneficiary. The form says that if no beneficiary is designated, it passes to the surviving spouse, or, if none, to the estate. He is unmarried. He later marries and dies without designating a beneficiary. Does it pass to the spouse or the estate?

It seems to me that since there are no spousal survivorship rights to an IRA, you would look to state law. It is not community property. Would not this be a matter of a contract under which the custodian agreed, at the time the account was opened, to pay it to the estate, which could only be altered by a subsequent designation of another bene?

[david rigby]

From the facts given

1. if no beneficiary designated, form defaults to spouse first, then to estate;

2. he designated no beneficiary;

looks like the spouse is the beneficiary.

[John G]

"no spousal survival rights to and IRA" ? This directly contradicts what you said before that the application had a contingency that if no designation, then spouse is default. By signing this form, the account holder agreed to the provisions. But he married later... well you could effectively argue that he took no action because he remembered the default was "spouse". I concur with Pax.

The will (if any) might contradict these intentions, but designation of beneficary would normally be expected to be primary. In this case the designation is not explicit but implied by inaction. If someone was to contest the beneficiary, then the will might become a factor if it was written after marriage and had explicit instructions that the wife was not to get the assets.

Clearly, you can take this question to a lawyer in the applicable state.

revised 10-3-01

[david rigby]

I have heard that in some states, any marriage or birth of a child subsequent to the signing of a will automatically invalidates that will. Not sure if this is accurate, but easy to see how such "life events" should be recognized in a will.

[Guest bsf]

The real issue is not what a Will could have provided, because IRAs pass outside of the Will and the probate estate under California law. This would be treated more like a life insurance policy.

It would be a matter of contract and the intent of the parties. If the owner intended for the funds to pass to the estate when he entered into the contract with the custodian, and under the form the custodian agreed to pay to the estate since he was not married at the time, can that agreement be changed without the consent of the owner/party in the form of another designation?

Of course the contract provided that if he was married AT THE TIME OF DEATH, the spouse would take unless he affirmatively elected to the contrary. It is possible that that is a part of the contractual agreement to which the owner, knowingly or otherwise, consented.