Hello. My wife and I are doing a bit of estate planning and thinking of some creative ways to avoid probate. We were wondering, since my wife will be well settled and financially comfortable if I die before her, if we can name our only child as the beneficiary of my IRA account. I was told that the money in an IRA goes directly to the surviving spouse even if I name a different person as the beneficiary. Is that the rule in Massachusetts?
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The Editor, Mark Bernardin, is an attorney living in MA. Please send your suggestions or comments to: TheEditor@malawforum.com
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Beneficiary for 401(k) or IRA other than spouse
I congratulate you for thinking about your estate plan, but I get a bit nervous when people talk about "creative" plans to avoid probate. Essentially, there are two kinds of probate avoidance plans, those that work, and those that don't. Please talk to an estate planning attorney about your estate plan, especially since your question implies that the estate may be significant.
Having said that, I believe the answer to your questions is yes, you can leave his or her IRA account to someone other than your a husband or wife. In fact, if you want your wife to be your beneficiary or the IRA account in the event that you predecease her, you must name her as such. The person who gave you the bad information may have been thinking about a 401(k) plan. The rules are different for 401(k) plans and a surviving spouse is automatically presumed to be the beneficiary of the account funds. There is an exception for very short marriages, but, in general, the surviving spouse must have agreed in writing to the naming of a different beneficiary. This rule has even been applied in situations where the surviving spouse signed a prenuptial agreement before the marriage agreeing not to make any claim to the 401(k). Good luck with your planning.