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What type of ruling would be needed to allow a fund company to honor a more recent will over an older beneficiary designation?

Raleigh, NC |

In his will, my dad designated my brother and I as beneficiaries of his traditional IRA account. On the beneficiary designation of the account itself, 'the estate' was listed as beneficiary. This was done long before his final will was done in 2011. Because of this, my brother and I are being forced to take accelerated distributions and deal with much higher taxes than if we had been individual beneficiaries of the account, as our father intended. He either just didn't remember doing the 'estate' beneficiary designation on the account or didn't realize the tax implications of it for his heirs. I realize that the account's beneficiary designation over-rides the will, but was wondering if relief could be gained via some type of court or IRS ruling. If so, what would be best way to go?

Attorney Answers 2


The beneficiary designation trumps the language in the will. Even if it was your dad's intent that you receive this money as individuals, since the estate was listed as the beneficiary on the actual IRA, the IRA became a probate asset. Instead of being able to take the money incrementally over your lifetimes, the payout will be immediate, causing unwanted tax consequences.
Your dad is not alone in making this error. Everyone reading this needs to check their IRA beneficiaries. I've seen money go to ex-spouses, parents instead of spouses, siblings instead of children and every other permutation that's possible. People tend to fill out these forms when they open an account or start employment and never revisit them.

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Michael S. Haber

Michael S. Haber


Very helpful answer.



Thanks for the response. I do realize the situation we are currently in. As I mentioned, I'm aware that the account's beneficiary designation over-rides the will even though the will was executed much later. My brother and I are looking at large tax bills because the distributions (income) will be hitting us over about a 6 year period based on our father's age rather than being stretched out over our life expectancies had the estate not been listed as beneficiary. The difference between our situation and the ones you cited in your 2nd paragraph is that there is no contention at all about who is to receive the distributions. They will go to my brother and I (as designated in the will). The only difference from what Dad intended is the highly unfavorable tax situation. So I suppose what you're saying is that there is no chance that a court ruling or seeking of an IRS Letter Ruling or Determination Letter might successfully address a situation such as this and allow the custodian to legally deviate from the account beneficiary designation. Is that correct?

Cheryl K. David

Cheryl K. David


That's correct; however I would advise you to see a certified financial planner to discuss strategically minimizing and offsetting your taxes. If you contact me offline, I would be glad to make some recommendations.


The IRA beneficiary designation will control what happens to the IRA funds. Once the IRA fund are paid to the estate, the designations in the Will then will determine what happens to the funds.

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