legal form of disclaimers
My mom needs to disclaim my dad’s IRA in favor of their 6 children listed as contingent beneficiaires. Is there a legal form to be followed to draw up the disclaimer (state of FL)? – notorized? and then filed in the records of the county court?? Also I had paperwork changed the lst month after death and I now realize she needs to do this based on her current finances, but can the IRA custodian (a credit union located in NJ) legally refuse to reverse the paperwork from 2 months ago and make her keep the IRA as primary beneficiary? No RMD has been taken yet for this year.
Permalink Submitted by Alan Spross on Wed, 2008-05-14 02:38
I would refer her to a FL attorney experienced in this area to be sure the disclaimer is in proper form. She should provide a copy of the papers she signed and the IRA agreement for review. Note the following:
1) Could be a problem if the papers already filed included wording tantamount to an irrevocable acceptance of the interest.
2) Taking the RMD would not affect the disclaimer because there is an exception for that had she taken it.
3) Be very mindful of the 9 month deadline.
4) Expect some resistance from the custodian since they would rather deal with fewer beneficiaries.
Permalink Submitted by Bruce Steiner on Wed, 2008-05-14 22:03
I don’t know what you mean by “I had paperwork changed.” The custodian can only take direction from the named beneficiary (except to give the executors the information necessary to file the estate tax returns).
The general rule is that you have 9 months to disclaim, and that you can’t disclaim an assets after you accept it, or the benefits of it. But this has been interpreted liberally. Your lawyer should look at Revenue Ruling 2005-36 for the IRS’ interpretation of this in the IRA context. I wrote a comment on it for Leimberg Information Services (Employee Benefits #309) when it came out. See http://www.leimbergservices.com
The lawyer handling your father’s estate should be able to review what has happened so far, and Revenue Ruling 2005-36, and if he/she thinks a disclaimer is possible, he/she should be able to prepare it.
If it’s not clear whether your mother can disclaim, she may want to consider having her lawyer apply for a ruling from the IRS.
Disclaimers are not unusual. Any lawyer practicing in this area will have done many of them. The financial institution should be familiar with disclaimers.
Bruce Steiner, attorney
NYC
also admitted in NJ and FL