Laws that securities companies must abide in handling inherited beneficiaries
I just inherited an IRA from my mother, it is split with my sisters, 3 of us total, so 1/3 interest a piece. She passed on June 7th, 2021. We received the death certificate on the 25th of June, it was submitted to UBS. I was contacted by an advisor from UBS who asked how I wanted my share of the stock portfolio disbursed. I chose to liquidate mine so I can transfer to another securities company. I know that this acct must be put into a inherited IRA out of my mothers name. The advisor told me that I cannot do anything until my two sisters decided what they wanted to do. The interest has to be transferred out at the same time, we must all be on the same page. When I told him that I knew that to be untrue, my father died and left me his share of his traditional IRA divided between 5 different beneficiaries, we were all allowed to do what we wanted individually without having to wait on the others. One chose not to accept the inheritance for tax reasons.
I need to know if they can take as long as 5 yrs as he said to decide. Last I spoke to him he once again, said they haven’t decided yet, I told him that I changed my mind and wanted to transfer the portfolio to another securities company and not liquidate. I found out that I would not be able to transfer from my bank acct and reinvest the total sum without paying tax on it. He said I couldn’t even transfer the stock itself to a different securities company. What is protocol or timeframe for them to put all our interests into a inherited IRA in our names, and then move forward from there. Before I can transfer into a new Inherited Acct. with another Securities firm, the UBS acct,. must be transferred from my mothers name and placed into a newly opened account in my name.
They said it wasn’t a law but was a UBS policy. My sister is behind this and I’m shocked that this gentlemen is advocating for her. This is outside of the probative Will. Why would they be held hostage to one beneficiary’s whim and not facilitate the wishes of the others. Can she legally hold us up for a ridiculous amount of time or file an injunction to contest the beneficiary.
What is the norm, what is the law, and what recourse do I have against UBS. This is my inherited interest, with that being said, who is responsible for losses incurred as a result of no one managing this acct.
Is such policy supposed to be listed on their website. Has anyone else had difficulties similar to this. I would like to know what to expect moving forward.
Thank you,
Debbie
Permalink Submitted by Alan - IRA critic on Wed, 2021-08-04 22:00
Sorry to hear of your loss. You are correct, and UBS even admits that there is no regulation that allows them to hold back your interest in the inherited IRA. There might be a small cost savings for them to create all the inherited IRAs simultaneously, and some custodians attempt this, but you are entitled to provide them with the info they need (death Cert and your personal info such as name, address, SSN, and beneficiary) and they should then be able to transfer your interest to an inherited IRA within a few days. You might have to retain an attorney to write a letter on your behalf, as UBS is bluffing and will likely back down if threatened with legal action. The letter might state that you have a low risk tolerance for stock volatility and want your portion of these shares liquidated to cash. I guess this is another question for the IRA owner to ask if they plan to name multiple beneficiaries, since no owners expect this from their IRA custodian. I cannot tell you what time limit the IRS or SEC considers reasonable to deny an IRA beneficiary access to funds, but at 6 weeks UBS has likely already exceeded it assuming you submitted everything they need.
If this IRA is held in an illiquid investment such as real estate or other non standard or proprietary UBS investments, there could be a unique need to liquidate them at the same time. Any chance of any such investments in this IRA?
I assume you would not leave your inherited IRA with UBS. You might check with your intended inherited IRA custodian to see if they have any advice in this situation, and if they can set up the inherited IRA at their firm and pull your interest in the other IRA over to your new inherited IRA. But they will probably tell you that you will have to establish the inherited account at UBS before they can request the transfer.
My guess is that one of your sisters may be procrastinating, but that would not change UBS policy. It’s a bad anti-consumer policy on display by UBS. And it may be aggravated by a poorly trained employee. UBS should have a dedicated beneficiary Dept to handle inherited accounts. I would call and ask for a specialist if you call them again.
It is true that IRA custodians are allowed by the IRS to use internal non disclosed policies to address certain situations that are not outlined in their IRA agreement. I doubt that any IRA custodian would disclose that inherited IRAs will not be set up until ALL named beneficiaries provide all needed info, and I have not heard of any that make this disclosure in their IRA beneficiary clause for obvious reasons.