An individual retirement account, or IRA, allows the account owner to designate a primary beneficiary and contingent beneficiaries. In most instances, the IRA passes directly to the primary beneficiary. However, if the primary beneficiary dies before the account owner or passes at the same time, the contingent beneficiary receives the account. If a parent with an IRA dies without a named beneficiary, it is possible for his child or children to receive the account.
When an IRA owner dies with no beneficiary listed on the account, the IRA becomes part of his estate. This leaves the IRA subject to the same inheritance laws as the rest of the estate. The executor of the estate must take charge of the IRA along with the other assets until the distribution of the inheritance can occur.
Estate with a Will
If the IRA owner left a will specifying the preferred distribution of his assets, then the IRA must be distributed according to the will. As long as a child isn't specifically excluded from the will, the IRA or equivalent assets could pass to the child according to the inheritance laws in the deceased's resident state. Even if the child is not listed as a beneficiary in a will that distributes the complete assets of an estate, the lack of a specific exclusion allows for the contesting of the document.
Estate without a Will
An estate without a will is typically distributed according to the inheritance laws of a given state. If the IRA owner was married, the spouse's rights to a portion of the estate equal or exceed the rights of any surviving children. In a community property state, the spouse automatically possesses half of the shared property in the marriage. In addition to this half, in most instances the spouse is entitled to a portion of the separate property when no will exists. This means the surviving child and the surviving spouse must share the deceased's portion of the estate's assets. In common law states, the spouse is automatically entitled to one-half of the estate if the deceased had one child or one-third if there are multiple children.
In a family with no surviving spouse and multiple children without a will, each child maintains a right to an equal portion of the estate. An IRA without a named beneficiary that becomes part of the account owner's estate belongs equally to each child. As the estate is divided during probate, the children could agree to split the assets in such a manner that one child receives the IRAs, another receives the real estate and a third receives the deceased's standard saving accounts. Otherwise, the IRA belongs to all of the children.
Each child receives a required minimum distribution based on individual life expectancy when all of the beneficiaries have established an account. If even one beneficiary refrains from establishing an account, the required minimum distributions are based on the oldest beneficiary's life expectancy. A beneficiary may also choose to receive the account's distributions over a five-year period.