Most people have at least one individual retirement account, and for some, it is a significant asset. Each IRA has a beneficiary. This is true even if the IRA owner, or participant, does not name a beneficiary. The beneficiary is either the person or entity named by the IRA owner on a beneficiary designation form or a default beneficiary, which is the estate of the owner.
IRA owners and their advisers must be knowledgeable when it comes to naming IRA beneficiaries. A mistake can have unintended consequences and could be costly to the owner’s heirs. Generally, an IRA will pass outside of probate, by operation of law, to the named beneficiary. This should be considered by the owner when reviewing his or her estate plan.
