Can a Wrong IRA Beneficiary Designation be Corrected After Death?
From: ultimateestateplanner.com
In recent PLRs 201628004 through 201628006, the IRS considered the effect of a state court action that modified the named beneficiary after the death of the IRA owner. In the rulings, the decedent had originally named three trusts as beneficiaries of his IRAs. The trusts qualified as designated beneficiaries under the IRC Section 401(a)(9) Regulations. When his IRAs were moved to a new custodian, however, the beneficiary was changed to his estate. It was represented that, although the decedent signed the new beneficiary designation form, he merely intended to move the IRAs from one custodian to the other and that he did not intend to change beneficiaries as part of this transaction. He simply signed the forms that were completed by his financial advisor.
After the decedent’s death, the trustees of the trusts petitioned the court to modify the beneficiary designation to carry out the original estate plan. The Court subsequently ordered that the beneficiaries of the IRAs were the trusts, consistent with the decedent’s prior beneficiary designation. The order was retroactively effective as if such designation were made on the date the decedent signed the beneficiary designation form. The taxpayer requested a ruling from the IRS that the life expectancy of the oldest trust beneficiary could be used to determine required minimum distributions (rather than 5 years, as is the case with an estate).
