Children disclaiming father’s IRA, so mother may rollover.
This situation involves a husband’s IRA that by error, had children, per stirpes listed as benefiicary. The wife is still alive. Where is there guidance to walk thru the process to have the two living children (there were only two) disclaim the IRA; there are 4 grandchildren, 2 over 18, 2 under age 18.–Must they also disclaim? What is best procedure for the 2 minor grandchildren to disclaim? The Trust Company says they will allow a reversion to the living wife, if all of the above is accomplilshed.
Any experience with this is appreciated
Permalink Submitted by Bruce Steiner on Thu, 2008-11-20 22:16
There’s no way to say whether the beneficiary designation was in error. The IRA owner is dead, so we can’t ask him. But (assuming the spouse is either the contingent beneficiary or the default beneficiary) you are correct — if the children and grandchildren disclaim, it will then go to the spouse, who can then roll it over.
A person under age 21 has until 9 months after reaching age 21 to disclaim, so one possibility is to wait until the grandchildren reach majority. But that’s generally not practical.
We’ve accomplished disclaimers on many occasions for minor grandchildren in cases like this. While the procedure may vary somewhat from state to state, generally the minor’s parent applies to be appointed as guardian for the minor, and then asks for court approval to disclaim on behalf of the minor. While the courts generally don’t allow disclaimers on behalf of minors, they’ll generally (at least in New York, and I’ve also done it in New Jersey) allow a disclaimer in this type of situation. The theory is that the children won’t disclaim unless the court allows the grandchildren to disclaim, so that by allowing the grandchildren to disclaim, the grandchildren aren’t giving up anything that they might otherwise have gotten, since if the court won’t allow the disclaimer, then the assets will go to the children (and not to the grandchildren).
By now this should have been done many times in most states, so that the courts in most states should be familiar with this situation.
Since the children have to disclaim within 9 months, you should act promptly, since it will take a while to accomplish all of the procedural steps needed to accomplish the disclaimers on behalf of the minor grandchildren.
Bruce Steiner, attorney
NYC
also admitted in NJ and FL