Decedent (73 yrs old) never named beneficiaries to IRA SEP expecting it to go to the estate. Investment company invokes default rule which is contrary to his very clear testamentary wishes. Investment firm suggests getting a court order to reform the beneficiary designations as it cannot now undo the default rule. Can anyone comment on this? Has anyone seen this kind of petition used successfully? Thanks for any help you can give.
While it is rarely beneficial to have your estate as your beneficiary, if the decedent wanted that result, they should have simply indicated “my estate” as the beneficiary and the default provision in the agreement would not have applied. Whenever there is no beneficiary listed, the first step has always been to to check the IRA agreement closely to determine the default beneficiary. While just a guess, this situation sounds like perhaps there was a surviving spouse who inherited the IRA per the default provision, while perhaps decedent’s will stated otherwise. Further, if that turned out to be the case, the surviving spouse may not be inclined to disclaim, particularly if the will beneficiaries are children from a prior marriage. Many similar situations end up in litigation of various types. Since there are many variables possible here, it is not possible to project the chance of eventually getting the IRA to someone other than the default beneficiary.
Permalink Submitted by Jose Morales on Thu, 2017-06-01 19:47
What is the default rule? Do you have a copy of the plan agreement? This is where any default beneficiaries would be identified in the event there are no named beneficiaries. Start there, then you can look into other options such as a disclaimer by the default beneficiary (if they are agreeable), written determination, or court order.