bank lost IRA beneficiary form
Hello. I am attempting to get a national credit union to correct the beneficiary designations provided by a POA for a disabled IRA owner. When the POA asked the company how to remove one of the beneficiaries from each of four different accounts at that institution, the officer consulted with management and then faxed forms filled in by the officer for each of the four accounts and indicating where the new beneficiary information (going forward) was to be placed, and where the POA was to sign each form. One of those forms was for an IRA. Each account was being changed in exactly the same way. A fifth account was changed in exactly the same way later.
All subsequent statements sent by the company looked like that one beneficiary had been removed correctly from the four accounts in question, including from the IRA.
After the owner’s death, the company has insisted that the one beneficiary’s name has not been removed from the IRA because its officer mistakenly sent the POA the ‘wrong form.’ Textual analysis of the form prepared and sent by the officer to the POA for the IRA account beneficiary changed reveals no material difference between that form and those routinely used by other national institutions for IRA beneficiary changes.
What can now be done to ensure that the one beneficiary’s name is in fact removed from the IRA? (The owner of the IRA lived in IL.)
Any ideas would be appreciated. This is a small IRA but the one beneficiary cannot legally afford to disclaim the IRA for legal reasons (state property law reasons, not tax reasons).
Kal
Permalink Submitted by Bruce Steiner on Sun, 2010-01-10 17:51
What do you mean by “the one beneficiary cannot legally afford to disclaim the IRA for legal reasons (state property law reasons, not tax reasons)”? State property law generally permits beneficiaries to disclaim. The tax law determines the tax consequences of the disclaimer.
If you’re the attorney handling the estate, perhaps you can get to someone higher up at the credit union. If the individual in question is willing to concede that he/she is not a beneficiary, perhaps the higher up person will be of more assistance.
Permalink Submitted by Kathleey Lahey on Sun, 2010-01-10 18:55
The problem with simply getting the one beneficiary to disclaim the interest is that doing so can open the door to state-level liability for social benefit clawbacks. Not every type of benefit program can reach such transactions, but that beneficiary was removed from everything except assets located in third-party trusts because this is a lifelong situation, and each of these types of situations (whether spend-downs or liens) are just too difficult to litigate.
And my post refers to ‘lost’ beneficiary form because first the bank lost all the forms their officer had prepared for the POA, and then found all of them (under pressure) but decided that the IRA form they had prepared for the POA was the ‘wrong’ form.
Attempts to go up the ladder of authority have not been productive. Each time a hand-off is made, the story changes and it is necessary to start all over again. So far the dealings have been mostly amicable, but it is time to think about the next step, so I thought I would run it by this discussion group.
Kal