Disclaiming an IRA

Submitted by jade singer on Fri, 2020-10-16 17:13

I am hitting a bunch of roadblocks in my effort to accomplish something that I assumed would be straightforward. Unfortunately, not the case and I am seeking some assistance.

My stepfather died at the end of March. He had an IRA in a bank in Queens, New York where he lived. My brother and I who live in California are the beneficiaries and my brother wants to disclaim his half and give it to me. The bank is in the dark about this. I have read numerous articles that say that he needs to write a letter to me and the bank with the correct information and that some states require that it be filed with the court. That’s where the problem has arisen. The bank does not know how this is done. I have spoken to the surrogate court, the probate court and the court administrator office of the Queens court and none of them have any idea of what must be done.

Would greatly appreciate advice on how to properly accomplish this.
thanks

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Permalink Submitted by Alan - IRA critic on Fri, 2020-10-16 18:28

As you probably know, the deadline to submit the disclaimer is 9 months from the DOD, so you only have 2 months left. Bruce Steiner, a NY estate attorney often posts here and if he sees this, he can provide you with the specifics. That said, the bank should certainly know more than they are telling you.

Permalink Submitted by jade singer on Fri, 2020-10-16 21:33

Thanks – I hope he see this and can help. And yes, both the bank and the court should know how to do this as a routine thing. I’m frustrated as hell. As for the timing, I began this process with the bank over a month ago assuming that I had an ample amount of time to submit the letter to all appropriate entities,

Permalink Submitted by Bruce Steiner on Fri, 2020-10-16 23:46

Alan: thanks for the kind words.

Neither the court nor the bank is responsible for knowing what to do. A lawyer prepares the papers. The papers are filed, signed and notarized, filed with the court, and served on the bank and on the persons whose interests are increased. It’s not as simple as a letter.

Unless the beneficiary designation provides otherwise, if your brother disclaims, his share goes as if he predeceased your stepfather. If he wants his share to go to you, he should make sure that, if he disclaims, his share would in fact go to you.

Bruce Steiner
Kleinberg, Kaplan, Wolff & Cohen, P.C.

Permalink Submitted by jade singer on Sat, 2020-10-17 00:46

Thank you very much for this information. Can you tell me which court it is filed in? I’m curious since none of the people I spoke to in the 3 Queens court departments had any idea about this.

Permalink Submitted by Bruce Steiner on Sat, 2020-10-17 13:57

In “the office of the clerk of the court having jurisdiction over the will or trust agreement governing the property of which the disposition would otherwise be made or the court which issued letters of administration, or if there is no probate or administration, then in a surrogate’s court provided by law as the place of probate or administration of the decedent’s estate.” New York EPTL § 2-1.11(c)(2).”

In other words, generally in the Surrogate’s Court in the county where the decedent lived.

Permalink Submitted by jade singer on Sun, 2020-10-18 01:53

Thanks again.It is my understanding that an IRA with beneficiaries is a non probate asset and therefore is dealt with separately from the estate.Is this correct?

Permalink Submitted by Bruce Steiner on Sun, 2020-10-18 02:22

Correct. An IRA passing to named beneficiaries isn’t a probate asset, since it passes to the named beneficiaries.

However, even though an IRA passing to named beneficiaries isn’t a probate asset, in determining where to file a disclaimer of an IRA, it’s the Surrogate’s Court in the county where the Will was probated (or where letters of administration were issued if the decedent didn’t have a Will).

Permalink Submitted by Virginia Fogarty on Sun, 2020-10-18 21:09

I, too, am having problems, but with Fidelity regarding disclaiming a portion of my spouse’s IRA. He had no will. All nonretirement assets have passed to me by order of law. My 2 children are named as contingent beneficiaries on the IRAs at Fidelity. Fidelity told me I would need to get a lawyer to sign off on the disclaimer. When I pressed Fidelity further, they told me if the amount was less than $99,000 I could do it without a lawyer. My time is running short also. My spouse passed away from Covid 19 the end of March and the 9 month disclaiming clock is running.My question now is. Can I do it for simply disclaiming $99,000 without a lawyer. I don’t know what the policy is at TD Ameritrade. There I would be disclaiming the entire account which amounts to about $25K.I would appreciate any advice.

Permalink Submitted by Bruce Steiner on Sun, 2020-10-18 21:44

Check the applicable state law for the requirements. In some states, such as New York, it would be difficult for people to do disclaimers by themselves. It might be easier in some other states.

Now that the stretch has been eliminated for children, you might want to keep the IRAs and disclaim other assets.

If you keep the IRAs you could give your children other assets. You can give each child $15,000 a year without it being taxable gifts. You could spread the gifts over a few years. Or, since you’re “inheriting” your spouse’s unused estate tax exclusion amount (assuming you file an estate tax return), if having a taxable estate isn’t a concern, you could give them an amount equal to the IRAs (perhaps some this year and some next year) and file a gift tax to report the excess above $15,000 a year for each of them as a taxable gift.

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