Who gets benefit?
A never-married 85 year old friend left a % of his IRA to my married 85 year old uncle. The friend died mid-2020 and my uncle died 5 months later. Does the benefit go to my uncle’s widow or my uncle’s estate? The IRA custodian said the widow. My uncle’s attorney needs proof for the court. Upon asking the custodian, they provided a PDF stating “If you do not indicate a beneficiary, your account balance will be paid to your spouse, if he or she survives or, if not, to your estate.”. Since not clear as this rule is from the IRA holder’s perspective, I asked them why. They stated because their rules are “hierarchical” meaning spouse of IRA holder, spouse of beneficiary, etc. That is the only “proof” they have but it’s not written anywhere (just their policy). My Uncle’s attorney cannot complete my uncle’s estate until this proof is received. The IRA custodian won’t assist further so we’re stuck. We just want to do the legally right thing. HELP!!
Permalink Submitted by Bruce Steiner on Sun, 2021-12-26 18:00
What do you mean by your uncle’s attorney needs proof for the court?
While I would think “you” refers to the IRA owner, if the executor of your uncle’s estate wants to avoid any risk of paying to the wrong person and ending up liable to pay to the other person, he/she could ask all of the interested parties (your uncle’s wife and the residuary beneficiaries of your uncle’s estate) to sign a release agreeing to a proposed distribution. If the interested parties won’t all agree, the executor of your uncle’s estate could ask the court to decide.
Permalink Submitted by Rob Odell on Thu, 2021-12-30 18:01
Thank you for your reply. My uncle’s attorney told me he needs proof for the court indicating the reason why either the spouse or the estate should receive the distribution. I assume he was being truthful to me. Do you feel he is not required to offer this proof to the court? Regarding your 2nd point of all estate beneficiaries signing a release, I had mentioned that also to the attorney, but he has not acted on it. He’s not very assertive.
Permalink Submitted by Rob Odell on Wed, 2022-01-12 15:23
Does a court need evidence / proof why an IRA custodian would give a benefit to a spouse or to the spouse’s estate?
Permalink Submitted by Alan - IRA critic on Wed, 2022-01-12 18:28
If uncle’s estate attorney and estate beneficiaries are not comfortable with the IRA Custodian’s decision, and the basis for their decision is not clear from the IRA agreement and a court is petitioned to determine legal entitlement, then the court would need to determine the basis for the custodian’s decision. That might include disclosure of all related operating procedures when the IRA agreement is not clear. After reviewing the custodian’s position, the court must either agree or come up with an equitable alternative. This all stems from possibly ambiguous operating procedures and IRA agreements.
Permalink Submitted by Rob Odell on Thu, 2022-01-13 15:52
Thank you very much.