IRA Beneficiary
16. Disadvantages
Of course, there are some possible disadvantages of naming your spouse as beneficiary that you must consider.
First, your spouse will have full control of this money after you die and is under no obligation to follow your wishes. So, this may not be what you want, especially if you have children from a previous marriage or feel that your spouse may be too easily influenced by others after you die.
If your spouse becomes incapacitated, the court could take control of this money. The money could be lost to your spouse's creditors. Also, naming your spouse as beneficiary can be an estate tax trap, causing your family to pay too much in estate taxes after you die. We'll discuss this more later in the presentation.
Finally, if your spouse dies before you and you don't remarry, you lose the rollover option.* But this is not really a disadvantage because now you can name a new beneficiary, and after you die the distributions will be based on the new beneficiary's life expectancy.
*NOTE: This used to be a problem, because distributions after your death would still be based on your and your deceased spouse's life expectancies.