Trustee to trustee transfer
I listened to the 1 hour CD you sent me, one point you made is make sure the current custodian allows trustee to trustee transfers AFTER DEATH. Let’s assume I find a client who has a custodian that does not allow transfers after death, that means the money has to remain under that custodians control until the assets are distributed. Correct?? More importantly, please tell me the potential problems a beneficiary will have if they find out to late the custodian will not allow a trustee to trustee transfer after death.
Permalink Submitted by Denise Appleby on Fri, 2008-03-21 01:47
You are right. If the custodian does not permit transfers, then the assets must remain with that custodian until distributed from the IRA.
One potential problem that comes to mind is if the beneficiary wants to do the stretch and the custodian does not permit the stretch. …
Another is the custodian may have limited investment options and/or does not permit investments that the beneficiary may want to choose. ..
Most custodians do permit the transfers. One way to check is to review the language in the IRA agreement, specifically the rights available to the beneficiary of the IRA. If it says something to the effect of “ upon the death of the IRA owner, the beneficiary will have the same rights as the IRA owner”, those rights usually includes transfers. Of course, those rights would exclude making IRA contributions and other transactions that can only be completed by IRA owners.
Permalink Submitted by Alan Spross on Fri, 2008-03-21 04:33
In addition, you might check what the custodian means when they decline the transfer. They may not realize that if they make out the check properly to the inherited IRA custodian showing the proper registration of the IRA, that the check can be handed to you for delivery to your new IRA custodian. The main requirement of a transfer is that the check is not issued in a form that allows you to cash it.