What happens if a husband leaves his IRA to someone other than his wife?
Dear Dan,
What happens if a husband names someone other than his married but still living wife as a beneficiary? Who gets the IRA, the wife or the beneficiary?
– Ellie
Hello Ellie,
Please keep in mind that I am not a lawyer and do not give legal advice. I write only general things here. We strongly recommend that you consult with a competent estate planning attorney regarding these matters.
Typically, with an IRA, the person named as the beneficiary inherits the funds. This happens by operation of law and regardless of what the deceased owner’s will or trust says about the disposition of the assets. This same dynamic exists for other accounts that allow owners to designate beneficiaries, such as retirement plans, life insurance, and “transfer on death” accounts allowed in some states.
However, there are laws regarding “elective shares.” An elective share can give the surviving spouse the right to a portion of the deceased spouse’s assets. These statutes exist in separate property states. Community property status is different.
Selective stock statutes are in place to prevent someone from completely disinheriting a surviving spouse. There are legitimate reasons for not wanting to leave funds directly to your surviving spouse. For example, a surviving spouse who marries with significant assets of her own may not need or want to inherit.
Perhaps the most common example of planned inheritance inheritance is a marriage in which at least one spouse has children from a previous relationship. This inheritance can be arranged to pass to the surviving spouse’s children immediately after the surviving spouse’s death, usually through a trust.
Despite what is called the Uniform Probate Code, elective stock statutes vary greatly from state to state. We do not treat all types of assets the same. The portions of an IRA that a surviving spouse who is not named as a beneficiary can obtain through elective shares are all over the map.
If you have any questions for Dan, please email him with ‘MarketWatch Q&A’ in the subject line.
Dan Moisand is a financial planner at Moisand Fitzgerald Tamayo, serving clients nationwide from offices in Orlando, Melbourne, and Tampa, Florida. His opinions are for information purposes only and are not a substitute for personalized advice. Talk to your advisor about what is best for you. Some reader questions have been edited to help present topics..
