Interesting Facts Retirement Savers and Their Beneficiaries Need to Know

  1. Once you die, the IRA will be bequeathed to a named beneficiary. The beneficiary can be a person or entity that you named in the designated beneficiary form. The beneficiary can be the spouse or non-spouse beneficiaries like a child, grandchild, other blood relatives, friends, trusts, or charitable organization.
  2. Retirement accounts do not have to go through the probate process if you designate beneficiaries properly. For instance, naming a spouse or an adult child as a beneficiary means the account won't have to go through probate.
  3. Does an IRA with a beneficiary go through probate?

    Do retirement accounts pass through probate? NO, as long as the beneficiaries are properly designated. Keep in mind that if the will stipulates anything about such accounts, the named beneficiaries take precedence over the will and the assets will be distributed to the named beneficiaries on the accounts.
  4. Retirement assets like 401Ks, IRAs and annuities may or may not go through probate, depending on whether the owner of the asset designated a valid beneficiary prior to death.
  5. Retirement accounts have a special ownership status because they are owned indirectly by the owner. The typical retirement account involves a “custodial” ownership for the benefit of (FBO) the “owner.” The FBO model allows the IRS to provide the special tax deferral that retirement accounts receive.
  6. Do retirement accounts pass through probate?

    NO, as long as the beneficiaries are properly designated. Keep in mind that if the will stipulates anything about such accounts, the named beneficiaries take precedence over the will and the assets will be distributed to the named beneficiaries on the accounts.

    YES, if there are no beneficiaries named on the account and if the plan documents or any associated IRA custodial agreements do not specifically address who would then be the beneficiary. For example, generally if all of the named beneficiaries have passed away first and the designation was never updated, the account will be subject to probate.