The 12 IRA Custodial Questions That Quietly Decide Who Gets Your Money

Most people believe they’ve handled their IRA planning responsibly. They named their beneficiaries. They may even have a will or a trust. On paper, they feel it looks complete—and if they did each of those tasks, it probably does.

But what actually happens to an IRA after death is often determined by something most people never see, never read, and never think to question: the IRA custodian’s rules.

Those rules live in custodial agreements, default provisions, and administrative policies—the light bedtime reading we know you curl up with every night. They quietly control how money moves, how fast it’s taxed, and who ultimately receives it.

That’s why there are twelve questions every serious advisor asks about an IRA custodian. Not because they’re academic. But because each one has the power to change outcomes in ways families don’t expect—and unfortunately can’t fix later when you realize you may need to.

1. What is the “default option” when there is no beneficiary named?
   This is where many IRA problems begin.
   When no beneficiary is named—or when a beneficiary form is outdated or invalid—the IRA does not follow a will. It follows the custodian’s default provisions. In many cases, that means the account becomes payable to the estate.
   That single shift can trigger a cascade of consequences: probate delays, accelerated taxation, loss of stretch or 10-year flexibility, and fewer planning options for heirs. What people assume is a small administrative oversight often turns into a permanent tax problem.
   Knowing the default option matters because it defines the worst-case scenario. Good planning comes with understanding what happens when they aren’t.
2. ‍Are “per stirpes” beneficiary provisions accepted?
   “Per stirpes” determines what happens if a beneficiary dies before the IRA owner.
   If per stirpes is accepted, that beneficiary’s share passes to their descendants. If it isn’t, the share may be reallocated among surviving beneficiaries instead.
   This is how families unintentionally disinherit grandchildren. Rarely ever is it because of their intent. Nor is it because of conflict. But it’s typically because the custodian didn’t recognize a legal phrase that the family assumed was standard.
   When multiple generations are involved, this question is a whole lot more foundational than technical.‍
3. Is a customized beneficiary form accepted?
   Some custodians allow only their standard beneficiary form. Others allow customization.
   That difference matters more than most people realize.
   Families with blended households, uneven inheritances, special needs concerns, or specific contingencies often need language that goes beyond a checkbox. If customization isn’t allowed, complexity gets flattened—and flattening complexity usually means losing control.
   This question is about whether the custodian supports real-world planning, or only generic outcomes.‍
4. Can the beneficiary name a beneficiary?
   This determines whether successor beneficiaries are allowed.
   If a primary beneficiary dies before fully distributing the IRA, can they direct where the remaining balance goes? Or does the account default to the estate or another rigid rule?
   Under the SECURE Act, where timelines are already compressed, the inability to name a successor beneficiary can accelerate taxation and remove the flexibility families expected to have.
   This question governs what happens after the first inheritance—and many plans fail right here.‍
5. Can non-spouse beneficiaries move investments via a trustee-to-trustee transfer?
   Non-spouse beneficiaries should be able to move inherited IRA assets directly between custodians without triggering taxes.
   If they can’t, they may be forced to liquidate investments, accept poor timing, or remain stuck with an institution that doesn’t serve them well.
   This isn’t simply an investment preference but about both control and tax efficiency. A forced liquidation at the wrong time can permanently damage an inheritance.‍
6. Are multiple beneficiaries and IRA splitting permitted?
   When an IRA has multiple beneficiaries, splitting the account is often essential.
   If splitting is allowed, each beneficiary can manage their inherited IRA independently. If it isn’t, everyone is stuck following the distribution rules of the oldest beneficiary.
   That means younger beneficiaries lose time. Tax efficiency declines. What should have been fair and flexible becomes rigid and inefficient.
   IRA splitting is one of the quiet mechanics that determines whether “equal” actually means “fair.”‍
7. Will a trust be accepted as a beneficiary?
   Not all custodians treat trusts the same way.
   Some will accept a trust but mishandle distributions. Others fail to support look-through treatment. Some impose administrative rules that override the trust’s intent.
   When a trust is named as a beneficiary, the custodian’s ability to administer it correctly becomes just as important as the trust document itself. A perfectly drafted trust can still fail if the custodian doesn’t properly support it.
   This is where good estate planning often collides with bad administration.‍
8. Will a power of attorney or disclaimer form be accepted?
   This question matters during incapacity and immediately after death.
   Powers of attorney allow trusted individuals to act on behalf of someone who can’t. Disclaimers allow beneficiaries to redirect assets in a tax-efficient way after death.
   If the custodian doesn’t accept these tools, planning opportunities disappear. Distributions become irreversible. Flexibility vanishes at exactly the moment families need it most.
   Many of the best post-death planning strategies depend on disclaimers—and they only work if the custodian allows them.‍
9. Is there a divorce provision?
   Divorce doesn’t automatically change beneficiary designations.
   Unless the custodian’s documents address divorce—and unless forms are updated—an ex-spouse can remain the beneficiary of an IRA.
   This is one of the most common and emotionally charged surprises in retirement planning. It happens quietly, without notice, and often comes to light only after death.
   Knowing how the custodian handles divorce is essential to preventing outcomes no one intended.‍
10. Is there a “simultaneous death” provision?
    When two people die close together, order matters.
    A simultaneous death provision determines whether assets pass through one estate or another, or skip directly to contingent beneficiaries. Without it, outcomes can hinge on minutes or hours.
    That timing can affect taxes, beneficiaries, probate exposure, and administrative complexity. Good planning anticipates bad timing. This question ensures the custodian does too.‍
11. Is there a “cross-collateralization agreement” that might disqualify the IRA?
    This is one of the least understood—and most dangerous—issues.
    If IRA assets are pledged, tied to loans, or cross-collateralized with other obligations, the account can lose its protected status. Tax deferral may be jeopardized. Creditor protection may fail.
    Many account owners have no idea such clauses exist. But once triggered, the damage can be permanent.
    This question is about protecting the integrity of the IRA itself.‍
12. Most important: Has the custodian updated provisions under the SECURE Act?
    This is the question that ties everything together.
    The SECURE Act fundamentally changed IRA inheritance rules. Most beneficiaries are now subject to a 10-year rule. Eligible Designated Beneficiaries still qualify for stretch treatment. Annual RMD requirements may apply depending on the facts.
    Not all custodians updated their documents, systems, or interpretations correctly. When they don’t, distributions are misapplied, planning strategies fail, and penalties or unnecessary taxes follow.

If you’re looking for help with any of this—or need to understand your broader retirement—we’d love to have a quick stress-free chat with you. No obligation, no commitment. Let’s have a conversation today!