Who Gets Your Ira when You Die? It’s Not so Simple

Many parents will split their inheritance 50/50, but what happens if one of the heirs passes away? Who does the IRA money go to?

If your children are alive when you die and you designated 50/50 outright beneficiaries, they will each get half the funds. They can do as they please including taking the funds in an Inherited IRA account and naming anyone they want as beneficiaries.

However, if either child passes away before you do then this could raise a few questions. If this occurs and you have not updated your beneficiary designation before you die there are two common default arrangements built into account forms for IRAs, retirement accounts, life insurance policies, annuity contracts and “transfer on death” arrangements available in some states.

  • The first default arrangement is per capita

If one child is deceased at the time of your death and still listed as a 50% beneficiary, their share will go to 100% to your surviving child.

  • The second common arrangement is per stirpes

Under per stirpes, instead of the predeceasing child’s share going to their surviving sibling, the share goes to the deceased beneficiary’s children.

For any IRA arrangements, you should get a copy of what you filed for your beneficiary designations to ensure it aligns with your wishes. However, if you want your assets to flow differently you should contact an attorney about drafting your own personal beneficiary designation.

For more information about who gets your IRA when you die, read the full article by Dan Mosiand at Market Watch and contact David Veliz at Veliz Katz Law today.


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