Upon death, Bank refuses to acknowledge the listed IRA beneficiaries

Submitted by Wendy Louttit on Sun, 2022-07-24 03:39

My mother passed away last September at the age of 93 and one bank where she had two IRAs refuses to acknowledge her beneficiary designations. Specifically to prevent this issue from arising, I went with my mother every year to confirm that beneficiaries were listed on both IRA accounts. We saw and confirmed the beneficiaries on their computer screen. But now that she has passed away, the bank says they need the original paperwork in order to transfer the funds to an Inherited IRA. They say they can no longer find their original paperwork (which has gone through two bank mergers). The banker in the local branch confirms that she has met with my mother several times and has seen the beneficiaries listed online, but the back office refuses to transfer the funds unless we can provide the original paperwork from many years ago. How do I proceed when the bank (acting as the fiduciary agent) will not agree to recognize the beneficiary designations in their own computer systems?



Submitted by Alan - IRA critic on Sun, 2022-07-24 04:35

  • This is maddening. This ridiculous request might reflect problems with their computer systems not showing the correct beneficiary due to the mergers and system changes, so now they are asking for the original paperwork which I feel that many IRA owners would no longer have. Further, original papers from several years ago does not guarantee that the beneficiaries might not have been changed by the IRA since that time. They are probably bluffing, and if you cannot locate these papers, perhaps you should retain a lawyer to deal with the bank. 
  • How much you want to spend on legal fees might depend on both the IRA balances, and if mother had a will in place that would result in the same beneficiaries inheriting the IRAs. But another issue is that if her estate inherits the IRA, the RMD distribution period will only be about 4 years, much less than the 10 year rule that would otherwise apply. 

Submitted by Wendy Louttit on Sun, 2022-07-24 20:01

I like your line of reasoning, that anything in their computer that has been confirmed in the last year or so is much more likely to be up-to-date than papers from many years ago.  I was hoping not to have to get a lawyer involved, but maybe that is the way to go at this point.  Thank you.!!

Submitted by Dan Zaehring on Tue, 2022-07-26 18:15

Sounds like the back office was looking for an easier way to accertain the beneficiaries than to have to go back into their backup records to find them.  Perhaps just your threat of engaging legal help would tilt that equation in your favor.

Submitted by Bruce Steiner on Tue, 2022-08-02 22:30

  • We had something similar.  I offered to send the bank a copy of the beneficiary designation form, together with a copy of my cover letter sending it to them, but they wouldn’t accept it, and insisted on paying it to the estate.  It worked out well because the estate had substantial administration expenses, and the estate was payable in the same way as the IRA would have been under the beneficiary designation.
  • In my case, the IRA was small.  If it had been larger, we might have considered going to court to ask for an order compelling the bank to recognize the beneficiary designation.  
  • Bruce Steiner

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