Vanguard and deceased beneficiaries for IRA

[bizlady]

Does anyone know definitively how Vanguard handles traditional IRA beneficiaries if one of the beneficiaries died before the IRA account owner?

Let's say you have an account and name your 2 children.

One child dies and you do not change your beneficiaries.

Does your IRA once you die go ALL to the single surviving child, or does 50% go to the surviving child and 50% to the deceased child's heirs/estate? Assume the will states 50-50 for each child (I know the beneficiary overrides the will)

Can't find anything online about this.

 

[RetMD21]

If you want it to go to children of the deceased they probably should be named as secondary beneficiaries.

 

[RunningBum]

Or add "per stirpes" for each beneficiary.

I don't know the answer but without this or secondaries I suspect it would all go to the surviving child.

 

[oldtimer]

link to Vanguard website Adding beneficiaries to your IRAs

 

[nap470]

For our Vanguard accounts, we have each other as primary beneficiary on our IRAs and our daughter as secondary. The statement below is from the beneficiary page at Vanguard.

"All primary beneficiaries have to be deceased before a back-up beneficiary receives assets. For example, if John and Jane Doe are listed as primary beneficiaries, and John passes away, Jane will get 100% of the assets (with no money going to the back-up beneficiaries)".

 

[bizlady]

For our Vanguard accounts, we have each other as primary beneficiary on our IRAs and our daughter as secondary. The statement below is from the beneficiary page at Vanguard.

"All primary beneficiaries have to be deceased before a back-up beneficiary receives assets. For example, if John and Jane Doe are listed as primary beneficiaries, and John passes away, Jane will get 100% of the assets (with no money going to the back-up beneficiaries)

By chance do you have that link? The person I’m trying to help wants her surviving children to be the recipients and she is concerned that if one child were to die that child’s share might go to grandchildren

 

[nap470]

By chance do you have that link? The person I’m trying to help wants her surviving children to be the recipients and she is concerned that if one child were to die that child’s share might go to grandchildren

I don't think I can send a direct link because you need to be logged in to access it. When logged in go to Profile & Account Settings >Beneficiaries >Manage Beneficiaries. You can change/update beneficiaries. There is Q&A also. Hope that helps.

 

[RetMD21]

link to Vanguard website Adding beneficiaries to your IRAs

Nice link, I didn't realize that Vanguard would let you designate by relationship (e.g. current spouse)

 

[OldShooter]

This thread points up the reason we haven't built TOD and other automatic actions into our estate plan: They can be high maintenance. As our circumstances and assets change and our beneficiaries become adults, there is a maintenance level of work on our estate plan. To also have to be concerned about checking and tuning direct beneficiaries on multiple accounts is just not attractive. The automatic transfers also are not well suited to contingencies like dealing the death of a primary beneficiary. I get the attraction for some people, but it's just not there for us.

The ultimate "oops" of course is the life insurance policy with an ex-wife as beneficiary.

 

[harllee]

This thread points up the reason we haven't built TOD and other automatic actions into our estate plan: They can be high maintenance. As our circumstances and assets change and our beneficiaries become adults, there is a maintenance level of work on our estate plan. To also have to be concerned about checking and tuning direct beneficiaries on multiple accounts is just not attractive. The automatic transfers also are not well suited to contingencies like dealing the death of a primary beneficiary. I get the attraction for some people, but it's just not there for us.

The ultimate "oops" of course is the life insurance policy with an ex-wife as beneficiary.

So what do you do for your beneficiaries of an IRA?

 

[Alan]

link to Vanguard website Adding beneficiaries to your IRAs

Thanks for this, and thanks to OP for the thread.

We will change our beneficiaries to “My Descendants”. Our son nearly died last year, a sharp reminder that these things happen.

 

[copyright1997reloaded]

So what do you do for your beneficiaries of an IRA?

Trust as beneficiary?
However, I think the secure act had impacts on this. Waiting for someone else here to add detail.

ETA: As Alan mentioned, they all "My descendants" which is per stirpes. So no need for trust?

 

[OldShooter]

So what do you do for your beneficiaries of an IRA?

IIRC the attorney told us to make our rev trusts the beneficiary and backup beneficiary. So the IRA just ends up in the estate and subject to all the terms that deal with the various unanticipated events that can occur.

 

[SecondCor521]

Does anyone know definitively how Vanguard handles traditional IRA beneficiaries if one of the beneficiaries died before the IRA account owner?

Let's say you have an account and name your 2 children.

One child dies and you do not change your beneficiaries.

Does your IRA once you die go ALL to the single surviving child, or does 50% go to the surviving child and 50% to the deceased child's heirs/estate? Assume the will states 50-50 for each child (I know the beneficiary overrides the will)

Can't find anything online about this.

If it is "Jane Doe 50%" and "John Doe 50%" as primary beneficiaries and Jane dies, then it would all go to John Doe. Jane Doe's estate and her descendants would get nothing.

If it is "Jane Doe per stirpes 50%" and "John Doe per stirpes 50%" as primary beneficiaries and Jane dies, then half would go to John and half would go to Jane's descendants (likely her children).

The only time that the will would come into play is if all of the primary and all of the contingent beneficiaries named predeceased the IRA owner.

 

[OldShooter]

If it is "Jane Doe 50%" and "John Doe 50%" as primary beneficiaries and Jane dies, then it would all go to John Doe. Jane Doe's estate and her descendants would get nothing.

If it is "Jane Doe per stirpes 50%" and "John Doe per stirpes 50%" as primary beneficiaries and Jane dies, then half would go to John and half would go to Jane's descendants (likely her children).

The only time that the will would come into play is if all of the primary and all of the contingent beneficiaries named predeceased the IRA owner.

And then there is the case where one of the deceased children has no living issue. Boring, boring, I have said it before: Anyone with significant money needs to consult expert help when doing estate planning. SGOTI just won't do it.

 

[SecondCor521]

And then there is the case where one of the deceased children has no living issue. Boring, boring, I have said it before: Anyone with significant money needs to consult expert help when doing estate planning. SGOTI just won't do it.

Agreed. I was only trying to answer OP's specific narrow question. I wouldn't expect anyone to do estate planning via Q&A on an internet forum. The former does sometimes lead to the latter, though.

 

[OldShooter]

Agreed. I was only trying to answer OP's specific narrow question. I wouldn't expect anyone to do estate planning via Q&A on an internet forum. The former does sometimes lead to the latter, though.

Sorry. I didn't intend to be picking you, just commenting on the general tenor of these types of discussions here. Most of us are volunteering information to the best of our knowledge. The problem is that "best" may not be good enough or may not be any good at all. My favorite internet cartoon:

https://en.wikipedia.org/wiki/On_th...ows_you're_a_dog#/media/File:Internet_dog.jpg

 

[RetMD21]

Like Oldshooter we have designated a trust as beneficiary on advice of an estate planning attorney. On the other hand naming specific beneficiaries by name or relationship is a good option for many people. We wouldn't have used a trust just for the IRAs. There are some complications with naming a trust as an IRA beneficiary but out attorney seemed to know all about that.

There is some level of maintenance to updating beneficiaries. This is probably more of a problem for folks as they get to an advanced age.