Unless your bank’s IRA plan documents prohibit such a designation, we believe that your customer should be able to name contingent beneficiaries for the inherited IRA. Illinois law recognizes beneficiary designations for retirement accounts, and Illinois courts have confirmed that contingent beneficiaries should be accorded the same treatment as primary beneficiaries in other contexts. Accordingly, we do not believe Illinois law would prevent the owner of an inherited IRA from naming contingent successor beneficiaries.

We recommend consulting with your service provider to obtain a solution to provide for contingent beneficiaries on the bank’s system for IRAs.

For resources related to our guidance, please see:

• Third Party Beneficiary Contract Act, 755 ILCS 30/1 (“[T]he designation under a pension, retirement, death benefit, deferred compensation, employment, agency, stock bonus or profit-sharing contract, plan, system or trust . . . of any person to be a beneficiary, payee or owner of any right, title or interest thereunder upon the death of another, or any assignment of rights under any of the foregoing, shall not be subject to or defeated or impaired by any statute or rule of law governing the transfer of property by will, gift or intestacy, even though such designation or assignment is revocable or the rights of such beneficiary, payee, or owner or assignee are otherwise subject to defeasance.”)

• Hawkins v. Voss, 390 Ill. Dec. 963 (5th Dist. 2015) (“Illinois law has consistently held that trustees assume the role of fiduciary and owe a fiduciary duty to both vested and contingent beneficiaries of the trust.”)

• In re Estate of Ellis, 236 Ill. 2d 45 (2009) (The Illinois Supreme Court ruled in favor of contingent beneficiaries in statute of limitations case for a contested will.)