Inherited IRA POD Beneficiary Bank Error

Submitted by James Ortega on Sat, 2016-12-24 06:30

So long story short, I was the named Beneficiary of 12 IRA’S from my deceased mothers estate. She has a surviving husband that signed off on the main IRA allowing my mother to designate someone else (me) as POD 100% Beneficiary. The bank then over time allowed my mother to add new IRA’S (eggs) under this main IRA (basket), and also list myself as 100% POD Beneficiary. On these subsequent IRA’s, the bank did not require spousal consent signature, and after a long court battle, the spouse was awarded the value of the subsequent eleven IRA’s, because he did not sign off on those.
My question now is….shouldn’t the bank now be held liable for this mishandling of the IRA’S due to the fact that they let my mother assign someone other than the spouse and not require a spouse signature? They led her to believe that her wishes would be followed. Can I sue the bank now for the $115k that they mishandled? If so, how do I go about finding the right type of lawyer for this type of financial institution lawsuit?
Thank you



Submitted by Alan - IRA critic on Sat, 2016-12-24 17:19

  • Is this a community property state?  Do you have a copy of at least one IRA agreement? On what basis were those IRA accounts awarded to the spouse?  A spouse is the automatic beneficiary on an ERISA plan, but IRAs are not ERISA plans, so I am curious how this decision was made. As for your question, because banks have large legal resources to represent them in litigation you need a pretty airtight case to prevail and your costs could be very high and uncapped. Of course you could have a consultation and if the lawyer tells you there is little chance to prevail, then you know. If you proceed, you should probably do so on a contingency basis. That way you know the lawyer feels you have a good chance to prevail because he is not guaranteed payment for his time.
  • Was there anything about the paperwork on these accounts that makes it appear that they are anything other than 12 totally independent IRA accounts?  Did they all have separate account numbers?
  • Did you have any legal representation in the former litigation?

Submitted by Jose Morales on Wed, 2016-12-28 01:47

You can sue anyone if you get a lawyer to file suit, it says nothing of the merits of the lawsuit however.  IRA Custodians are in no way responsible for an individual’s beneficiary designations and should in no way offer guidance or advice when it comes to who is named a beneficiary.  The spousal consent language in many beneficiary designation forms is there for the convenience of the individual’s use to comply with any state requirements that may complicate the designation of a non-spouse beneficiary.  It is up to the individual to be aware of the nuances of their particular state’s laws and/or court decisions and how they may have an impact on who is named as beneficiary.  Although this isn’t an ERISA lawsuit, a lawyer that specializes in ERISA and employee benefit cases would most likely be the most knowledgable person to consult regarding your specific set of facts and circumstances.

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