can an IRA plan prevent you from disclaiming all/part?
my mom and i are the two beneficiaries on one of my aunt’s IRA accounts, w/ a 75/25 split. she is meeting with a financial planner next week and will be discussing whether or not she needs the proceeds…would possibly like to disclaim part or all of it and let it pass to me. i contacted prudential and asked if my mom would be able to do this, and the rep i got on the phone told me “no, we have to distribute it exactly as it is specified on the beneficiary form.”
my first question is: is this truE? can they actually prevent a beneficiary from disclaiming and force them to take their entire share?
second question: if this isn’t true and my mom can actually disclaim part of her share, how does she go about doing that?
third question: my mom and i are the two primary beneficiaries…i’m not sure if there was a contingent. if she disclaims, does that portion pass to me as the other primary or onto a contingent if there is one?
of course if the answer to question one is that they can prevent her from disclaiming that makes two and three moot…
Permalink Submitted by Bruce Steiner on Thu, 2012-04-12 03:22
The lawyer handling the estate (or any other competent tax/estates lawyer) will know how to prepare the disclaimer.
The disclaimed portion will pass as if Mom had predeceased Aunt, unless the beneficiary designation otherwise provides. Mom should confirm what the beneficiary designation says so she’ll be sure what the consequences of a disclaimer would be.
I wrote an article on disclaimers for the November 1990 issue of Probate & Property. I don’t think it’s online but you could probably find it in a law library.
Permalink Submitted by matthew greco on Thu, 2012-04-12 07:10
but she should be able to disclaim, right? they shouldn’t be able to prevent her from doing that?
part of the problem with this whole thing is that we don’t know how much money is in the account. prudential won’t tell either of us how much is there until we split it…all they’ve told us is that we are the two benueficiaries on the account, and i got them to tell me that i was 25% (even though they still won’t tell us how much).
i’ve got an account in the process of being opened at wells fargo for my portion that i also rolled her pension into that i inherited. the fact that we’re flying blind on the amount, though, is beyond frustrating…
Permalink Submitted by mk foss on Thu, 2012-04-12 17:29
Normally the individual (at the direction of the attorney for format and legalities) presents the disclaimer to the custodian and they act upon it. Going to the custodian first may have created the problem because those answering phones or dealing with people on the front lines wouldn’t ordinarily see a disclaimer.
There ar specific requirements about the disclaimer – in this case timeliness would be the most important one because it looks there is no access to the funds as yet.
Permalink Submitted by matthew greco on Thu, 2012-04-12 19:57
is there a way to get prudential to tell us what the amount is and how the beneficiaries are structured before making that decision?
Permalink Submitted by Alan Spross on Thu, 2012-04-12 21:22
As long as you have provided the death certificate and they acknowledge your interest in the account, you have a right to know the account balance. I would press to talk to senior staff. You obviously can’t make a logical decision about a disclaimer if you don’t know whether the account balance is $100 or $100,000! Below a certain minimum a disclaimer is not worth the expense.
Permalink Submitted by matthew greco on Thu, 2012-04-12 21:28
i’ll have my mom call and press them on it…i’m not sure if they have a copy of the death certificate yet, since they asked us to send one along with the rollover/payout forms they gave us to fill out.
one alternative i thought of was since they at least told us that the split was 75/25, i can claim my portion and find out the total balance based on that…still, it would be nice not to have to jump through hoops.
if i claim my part, my mom can still then disclaim part or all of hers afterward, right?
Permalink Submitted by Alan Spross on Thu, 2012-04-12 23:04
Yes, claiming your part will not affect your mother’s ability to disclaim her part. Neither will distributing any of the aunt’s RMD for her year of death should there be such an RMD due.