When my father passed away, I helped my mother rollover his traditional IRA to her own name.

I helped her designate my brother, my two sisters and myself as beneficiaries for the account, by simply listing our names.

Sadly, one of my sisters died from cancer before my mother’s death. No changes were made to the beneficiaries of my mother’s IRA after my sister’s death.

After Mother’s death, I went to her credit union to arrange for distributing the balance of the IRA. I was surprised to learn my deceased sister’s share didn’t go to her children, my two nephews. Since my sister predeceased my mother, her name was simply removed as a beneficiary and her share was divided equally by my mother’s remaining children.

Fortunately, my mother’s revocable living trust had language that preserved the share of my sister’s children for her remaining assets.

My nephews, who were adults, felt fortunate to receive any inheritance from their grandmother, and the balance of the IRA was small, so they weren’t concerned.

Their father, my brother in law, was more sensitive about his sons’ inheritances. I was embarrassed to explain that his sons wouldn’t receive a couple of thousand dollars each from the IRA. He also let the matter go.

For many families, the largest assets in a decedent’s estate are the family residence and the decedent’s retirement accounts. Making beneficiary designations for the retirement accounts is very significant, and most of us don’t consult with an estate planning attorney when making those designations. We just quickly “fill out the forms”.

Since we don’t normally think about our retirement accounts as accessible assets, they can be “invisible” assets that are even neglected by attorneys for estate planning. This is a big mistake. Whenever working on an estate plan with an attorney, remember to include your retirement accounts, including your beneficiary designations.

If my mother had included two little words after my sister’s name, her share of the IRA would have gone to my sister’s children. The words are “per stirpes”.

They are a legal phrase that roughly mean “by right of representation”. For example, for the beneficiary designation “Mary Smith, per stirpes”, if Mary predeceases the IRA owner, her share is divided equally by her children. If Mary and one or more of her children predecease the IRA owner, a deceased child’s share would be divided equally by that child’s children (Mary’s grandchildren via that child). Etc.

My understanding is “per stirpes” isn’t used when naming a spouse as a beneficiary. In that case, children, per stirpes could be named as successor beneficiaries for the contingency of the spouse’s death.

After my experience after Mother’s death, I changed the successor beneficiaries of the retirement accounts for my wife and myself, listing our children, per stirpes, as successor beneficiaries.

I recommend that you consult with an estate planning attorney to create your estate plan, including discussing your retirement accounts. While that’s in process, consider adding “per stirpes” to your beneficiary designations.

Michael Gray, CPA is the co-author of How To Use Roth & IRA Accounts To Provide A Secure Retirement, 2025 Edition. rothirainvestingbook.com