IRA
Terry my mother recently passed away had a Traditional IRA account. Beneficiaries are her 7 children. One of the seven children has passed away and she did not update her beneficiaries. What happens to the deceased 1/7 share Thank you
Terry Says
Answering this took a bit of research, but here’s what I found. A lot depends on teh wording of the beneficiary designation at the custodian. If all were declared equal beneficiaries, no problem. But if not, then it’s possible that the heirs of the deceased beneficiary would inherit her share — “per stirpes”. Again, it depends on how the beneficiary form reads.
Read this:
If a primary beneficiary dies before the IRA owner, she generally ceases to be a beneficiary and the assets would be divided among the remaining surviving beneficiaries. (Less common than this “per capita” beneficiary succession is what is known as “per stirpes” succession, in which the heir(s) of a primary beneficiary who died before the IRA owner would inherit after that primary beneficiary’s death.) If the original beneficiaries are entitled to equal percentages, then they are entitled to an equal share of the predeceased beneficiary’s portion. But if the original beneficiaries are not entitled to equal percentages, then they are not entitled to an equal share of the predeceased beneficiary’s portion.
You should discuss with the IRA custodian.