For Executor To Disclaim IRA, Get California Court Approval?
A month after the death of an IRA owner, the primary beneficiary wife also died, just before the IRA custodian received her paperwork to assume her husband’s IRA into her existing IRA. Since she was known by the IRA custodian to be newly deceased when her paperwork arrived, that custodian intends to pay the husband’s IRA to the wife’s estate and not to transfer it into the wife’s own IRA which names their sons as primary beneficiaries.
The husband’s and wife’s wills each state, “I nominate and appoint my son [named] as Executor of this Will.” Their IRA’s have designated beneficiaries and their house is in a living trust and there is very little that could be probate estate assets–about $20,000. total, so probate is not needed for this in California.
The Executor would like to disclaim the IRA on behalf of the wife’s estate so that it goes to the husband’s IRA secondary beneficiaries, their sons.
Q. 1: In California is court approval needed for the appointment of the Executor?
Q. 2: Is further court approval needed if the Executor wishes to disclaim the IRA on behalf of the wife’s estate? He would do so before 9 months from the husband’s death.
Q. 3: Other than by specifying a 30-day survival contingency, can an IRA owner who names his wife as primary beneficiary of his IRA somehow prevent or lessen the risk of his IRA passing to his spouse’s estate in the event of her untimely death?
Thank you for any information.
Permalink Submitted by Alan Spross on Wed, 2009-11-11 04:10
Perhaps Mary Kay Foss will see this post and address it. She works with CA estate issues. Meanwhile, the abbreviated probate process applies if the value of the probate estate is under 100,000 of qualifying property. The following link provides some disclaimer information, but I don’t see where it ties into the abbreviated probate process:
http://lawdigest.uslegal.com/wills-and-estates/disclaimer-of-property-in…
With respect to preventing exposure to survivor’s untimely death, a qualified trust beneficiary with contingent trustee specifications along with the survival period might work. In CA, there is also a simultaneous death provision that applies if the two pass in a very short time frame, and you also have the possibility of a contest regarding the separate vrs community property interests of the IRA assets.
Permalink Submitted by Bruce Steiner on Thu, 2009-11-12 04:20
The appointment of the executors is a routine part of the process of probating a Will.
Under § 277 of the California Probate Code, an executor needs court approval to disclaim on behalf of a decedent, unless the executor has obtained court approval for independent administration of the estate under § 10500. If the executor has obtained court approval for independent administration, then § 10519 says they can disclaim without further court approval.
Since I don’t practice in California, I don’t know whether it’s more common to get approval for independent administration at the inception of the estate, or to seek court approval for the disclaimer.
In New York, by contrast, independent administration is the rule. In other words, with very few exceptions, the executor can do whatever he/she wants without having to get court approval; except that an executor needs court approval to disclaim on behalf of a decedent. But where the beneficiaries are agreeable to the disclaimer, getting court approval is routine.
In New Jersey, an executor needs court approval to disclaim on behalf of a decedent unless the Will authorizes the executor to disclaim without court approval.
You can provide for a survivorship requirement of up to 6 months without jeopardizing the marital deduction if the spouse survives. But the disadvantages of that are that (i) if the spouse survives the IRA owner but dies within the survivorship period, the marital deduction is lost, and (ii) if the spouse survives the IRA owner but dies within the survivorship period, the opportunity to do a rollover is lost.
Permalink Submitted by mk foss on Thu, 2009-11-12 19:23
In California it can be more confusing. An attorney friend of mine described this process – the children (contingent beneficiaries) applied for letters of administration.Then they disclaimed the survivor’s one-half community property interest in the IRA. The disclaimer was filed with the probate court.
It’s confusing in a community property state because you cannot disclaim what you already own – 1/2 of the IRA unless they parties have agreed to a nonprorata division of their property.
So many people have living trusts in California that you wouldn’t have an executor appointed . You’d need letters of administration for this one asset – and if it’s disclaimed you would have no assets to probate.
Permalink Submitted by fairira on Fri, 2009-11-13 06:16
Thank you all for your helpful information.