Preventing Unclaimed Non Spousal Inherited IRAs from Escheatment
I saw some very cogent discussion on the topic of non-spousal beneficiary IRAs and beneficiaries who took no action to claim the inherited IRA, so I thought I would ask about the twist affecting the estate for which I am the executor.
The four beneficiaries are all children of the decedent, and three of them acted within a year of the decedent’s passing to claim and transfer the inherited IRAs to their own names. The fourth, and from the forum I see that all too frequently there is typically one, has taken no action.
The decedent passed in 2015, all 2015 MRDs were processed by the decedent, and the three beneficiaries have claimed and received the 2016 MRD for three or four IRAs. All necessary documentation, suggestions, and guidance from each of the financial institutions involved were sent to the fourth beneficiary multiple times over the past thirteen months.
It appears that unclaimed funds will be escheated to the state in Maryland after two and a half years of inactivity, and that the financial institutions themselves take no action to work with beneficiaries. Fidelity in particular indicated that it would only transfer or disburse funds further with a court order. Which brings me to my question.
What is the estimated rate of success if the Estate were to file with the court to obtain an order after X period of time to pass the remaining IRA share into the Estate? While there are inherent tax issues, it seems like a better scenario than handing over the funds to the state of Maryland. The case would be built on issues such as the fourth beneficiary’s expressed wish to assign any inheritance to a sibling (and disinterest in receiving any share of the inheritance,) the fourth beneficiary’s lack of response to all communications subsequent to May 2016, by the fourth beneficiary’s assertion that they will not disclaim anything in favor of the other two siblings, etc; maybe even add in a soupçon of family intrigue where the fourth sibling is the Executor for the other parent’s Estate, open since 01/01/2001, and is currently in contempt of court for failure to act over the past two-three years.
Permalink Submitted by Alan - IRA critic on Sat, 2017-01-21 16:24
Your question could be better addressed by a Maryland estate attorney, but this sounds like a long shot. Further, if the court even considered this, there would certainly be more red tape and requirements to be met to be certain that the rights of that beneficiary would not be impaired. This effort would also result in the estate having to remain open for a considerable period of time. Obviously, the balance of the inherited IRA remaining is a major factor in your decision. Who are the beneficiaries in the decedent’s will? If the difficult beneficiary is also a will beneficiary then your executor duties could become a real hassle.
Permalink Submitted by Ben Meyer on Sat, 2017-01-21 17:34
Will the fourth brother agree to anything at all? Would he agree to providing a limited power of attorney to allow one of the other siblings to claim the IRA and establish an inherited IRA on his behalf? Can the three of you convince him? Since the IRA is his property, your only interest stems from the thought he has expressed that he wants to give the IRA to one of the other siblings. Or that, in some way, his actions, or lack of actions, are adversely affecting your ability to administer the estate. [*] Other than that, he may well have the right to refuse to accept money, unless his behavior is so bizarre that he is declared incompetent. I take it that he has no children or spouse. As Alan says, advice from an appropriate Maryland estate attorney may be in order.