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Estate planning question- 401k and IRA beneficiaries
Old 04-25-2014, 12:38 PM   #1
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Estate planning question- 401k and IRA beneficiaries

I asked this question on facebook, and an attorney told me "it depends". So curious what kind of answers I get here.

Question:

If my 401k and IRA benficiaries are my kids at 50% each, and the contingent is my 75 year old father, what happens to the 401k and IRA assets if one of my kids dies before I change the beneficiary? FYI I am divorced.

Does my other kid inherit 100%
Does my dad inherit the 50% which was allocated to my deceased child?
Or what other considerations are in play?

And I know setting up a trust solves the problem. Curious if anyone has seen this happen, and what state are you in where that was the flow of assets?
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Old 04-25-2014, 12:45 PM   #2
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Since your dad is in the contingent beneficiary class, your other kid inherits 100%. Generally a trust does not directly address IRA and 401k assets because the beneficiary designations with those assets take precedence.
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Old 04-25-2014, 12:57 PM   #3
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I understand that the contingent only kicks-in if the primary beneficiary fails completely. But I'd call or email the company managing the account and have them tell you. It should be "an easy one" for them.
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Old 05-17-2014, 02:24 PM   #4
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Did your spouse sign off of being the immediate beneficiary in favor for children? I/wife had to sign waivers to assign our son to be the beneficiary on some of the IRAs. Happened when we were "mad" with other.
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Old 05-17-2014, 02:50 PM   #5
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[QUOTE=jIMOh;1442366]If my 401k and IRA benficiaries are my kids at 50% each, and the contingent is my 75 year old father, what happens to the 401k and IRA assets if one of my kids dies before I change the beneficiary? FYI I am divorced.QUOTE]

LongPrime, He doesn't need her to sign off.

Jimoh, The remaining son would inherit 100%. Your father is contingent if both pass away. BUT to make everything straight forward the name of the son that passed should be removed as beneficiary as soon as possible. Why can't your estate attorney answer your question?
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Old 05-17-2014, 04:50 PM   #6
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[QUOTE=splitwdw;1449995]
Quote:
Originally Posted by jIMOh View Post
If my 401k and IRA benficiaries are my kids at 50% each, and the contingent is my 75 year old father, what happens to the 401k and IRA assets if one of my kids dies before I change the beneficiary? FYI I am divorced.QUOTE]

LongPrime, He doesn't need her to sign off.

Jimoh, The remaining son would inherit 100%. Your father is contingent if both pass away. BUT to make everything straight forward the name of the son that passed should be removed as beneficiary as soon as possible. Why can't your estate attorney answer your question?
The attorney which did my will, POA and related documents said this is based on the 401k plan, or the IRA custodian, and not based on STATE statute or similar.

Meaning the 401k based on plan documents would resolve one way
my IRAs at etrade based on their rules would resolve another way

I asked here (open ended) to see what others might have encountered or heard.
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Old 05-17-2014, 08:50 PM   #7
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@splitwdw.
It is easier to use the quote function (green boxes, lower right, and then delete what you don't need.

Does a divorce cancel out the previous assigned beneficiary(ex Spouse)? and Does a new assigned beneficiary supercedes old beneficiary (ex spouse) applied to IRA and non qualitifed accounts?
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Old 05-18-2014, 08:13 AM   #8
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Quote:
Originally Posted by LongPrime View Post
@splitwdw.
It is easier to use the quote function (green boxes, lower right, and then delete what you don't need.
LongPrime, I did. You are reading the OP's reply quoting me.
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Old 05-18-2014, 11:14 AM   #9
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Quote:
Originally Posted by LongPrime View Post

Does a divorce cancel out the previous assigned beneficiary(ex Spouse)? and Does a new assigned beneficiary supercedes old beneficiary (ex spouse) applied to IRA and non qualitifed accounts?
I have changed jobs and changed IRA custodians since my divorce, so neither custodian even knows my exes name

This is an example if everything works out and I outlive my kids, no issue
If something happens to one of my kids and me at same time, then there might be problems...
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