IRA Digital Reference Manual - September 2024 - 239

Chapter 10 - Death Distributions
If an IRA owner wants to leave all or a portion of an IRA to an ex-spouse, the IRA
owner must address the existing beneficiary designation in the divorce decree, or the IRA
owner must complete an IRA Change of Beneficiary form after the divorce with each IRA
sponsor, making sure to sign and, most importantly, date the form. If the IRA owner resides
in a state that has not adopted a revocation-on-divorce law, a divorce will generally not
affect the IRA beneficiary designations already on file with IRA sponsors. However,
completing a new IRA Change of Beneficiary form that is dated after the date of the divorce
may be advisable to prevent other family members from challenging an ex-spouse
beneficiary designation in court, or to protect the ex-spouse in the event the state later
enacts a revocation-on-divorce law.
Upon receiving a death certificate for an IRA owner, IRA sponsors must be cognizant
of the laws of the state where the IRA owner resided at the time of death. The death
certificate will state if the IRA owner was married at the time of death, and, if married,
who the surviving spouse is. This should be checked against the most recent IRA
beneficiary designation on file. If a former spouse was named, and the designation was
made prior to being divorced from the IRA owner, another beneficiary may be entitled to
his or her share of the IRA.
Trust as Beneficiary
A trust may be the named beneficiary of an IRA, mainly to allow the participant greater
control over how his assets will be distributed after his death, to obtain certain tax
advantages, and to potentially avoid probate. A trust is a legal entity, generally created by
a written instrument, that provides that one individual, called a trustee, will take control of,
and manage, money or property for the benefit of other persons, called beneficiaries. An
example is a revocable living trust, a popular estate-planning device, in which the grantor
of the trust retains complete control over all of the assets of the trust during his or her
lifetime, but after the grantor's death, the (successor) trustee of the trust takes control of
such assets and follows the wishes of the grantor as outlined in the trust document. (See
Chapter 9, Trusts as Beneficiaries and Chapter 10, Death After 2019 and Trust as
Beneficiary)
Using a trust as the beneficiary of an IRA may provide an individual with more control
over the ultimate disposition of the plan assets. The financial organization should have
procedures in place for making payouts to trusts, such as:
1. Verifying the identity of the trustee.
2. Obtaining the tax identification number (TIN) of the trust. The individual's legal
representative may obtain a TIN from the IRS by mail, fax, or online. [Instructions
to IRS Form SS-4, p. 1] For distributions without a TIN, the trust may not elect to
waive federal income tax withholding. [IRC §3405(e)(12)]
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IRA Digital Reference Manual - September 2024

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