No Designated Beneficiary
Have a client whose husband died in Feb. 2015. He was over 70 1/2 and had been taking RMDs. He is a resident of New York. One of his IRAs was held at a bank. Husband and wife went to the bank to make sure the IRA was in good order as he was very ill and nearing the end of life. The bank manager looked at the account and told them that everything was in good shape. Upon his death, his wife tried to roll over the IRA into her name and was told that there was no beneficiary form on file for the account. The bank said that they will have to pay out the entire amount to his estate (making it fully taxable) unless they can get a letter from the court designating her as the beneficiary.
The deceased husband’s will indicated that his wife be the sole beneficiary of his estate. What are the wife’s options? What is the likelihood that a court of law will designate her the beneficiary of the IRA? Thanks for your help.
Permalink Submitted by Bruce Steiner on Tue, 2015-09-08 20:05
Permalink Submitted by Alan - IRA critic on Tue, 2015-09-08 20:21
Client should get a current copy of the IRA agreement and check the default beneficiary clause. If the estate is the beneficiary banks usually push to distribute the entire IRA to the estate ASAP so they can wash their hands of the IRA. The lump sum distribution should be resisted until the IRA agreement and the course of action is determined. Hopefully, the bank manager will not be looking at any more IRA accounts and deeming them to be in good shape when they do not have a designated beneficiary.