Advanced Underwriting Consultants

Question of the Day – July 25

Ask the Experts!

The professionals at Advanced Underwriting Consultants (AUC) answer the tax and technical questions posed by producers.  Here’s the question of the day.

Question: My client failed to name a beneficiary for her IRA.  She died in North Dakota, leaving a surviving spouse, three step-children and no other close relatives.  She had no will.  Who gets her IRA?

Answer: Most IRA custodians have a rule that if there is no named beneficiary for the account, the taxpayer’s estate will be the default beneficiary.

Assuming that to be the case in this example, the custodian would look to the client’s executor to determine who would be entitled to the estate under the client’s will.  If, as in this case, the client passed away without a valid will, the law of intestacy in her state of residence would determine who is entitled to the IRA.

The intestate succession statutes in North Dakota say the following:

29A-2-102. Share of the spouse.
The intestate share of a decedent’s surviving spouse is:
(1) The entire intestate estate if:
(i) No descendant of the decedent survives the decedent

So in this case, the surviving spouse would be entitled to the IRA balance.  Usually, the IRA custodian will require the intestate heir to produce some documentation from the probate court before releasing the funds.

Have a question for the professionals at AUC?  Feel welcome to submit it by email.  We may post your question and the answer as the question of the day.