Bank Error
Brother died without a will, no wife, no children, parents are deceased. He has a Traditional IRA with Credit Union. On 1998 account documents when the account was opened, IRA beneficiary was designated as his partner. On paperwork he signed in 2005 when the CU updated their forms there is no beneficiary designated. We know his wish is that his partner receive the IRA. Credit Union will only issue check to the Estate since the most recent document leaves the beneficiary designation blank. Is there any way we can hold the Credit Union to the orginal beneficiary designation? If the IRA must be paid to the estate, do we now have to file an estate tax return (entire estate is less than $500K)?
Permalink Submitted by Alan Spross on Mon, 2009-08-31 23:19
If there is any indication of clerical error, the CU would have to consider the request. However, if the paperwork he signed determines the beneficiary, and he allowed the beneficiary clause to use the agreement default beneficiary, there would be very little grounds for contesting it.
The estate should determine when any IRA distribution is made. If the estate has no income due to no distribution being made for a particular year, there is no filing requirement for a 1041. Executor needs to determine by age of brother at death and IRA agreement whether the 5 year rule applies or if the IRA can be stretched over brother’s remaining life expectancy if brother passed after his RBD. After the estate is terminated, the IRA can be assigned to the state law dictated beneficiaries of the estate. That will enable the beneficiaries to individually control their portion of the IRA, but the RMD schedule is not changed due to estate termination.