VANGUARDBENEFICIARY
VANGUARD BENEFICIARY FORM DESIGNATED “DESCENDANTS PER STIRPES”. VANGUARD SAYS IT WILL OPEN INHERITED IRAS BUT WILL REQUIRE AN ESATATE TO BE OPENED AND AN APPOINTED EXECUTOR TO CERTIFY WHO BENEFICIARIES ARE!! ANY THOUGHTS!!
VANGUARD BENEFICIARY FORM DESIGNATED “DESCENDANTS PER STIRPES”. VANGUARD SAYS IT WILL OPEN INHERITED IRAS BUT WILL REQUIRE AN ESATATE TO BE OPENED AND AN APPOINTED EXECUTOR TO CERTIFY WHO BENEFICIARIES ARE!! ANY THOUGHTS!!
Permalink Submitted by Al Fry on Sun, 2008-04-06 23:57
Makes sense to me. They do not have the resources to track down a dead beneficiary’s heirs.
Permalink Submitted by Bruce Steiner on Mon, 2008-04-07 01:26
The executor seems to be the logical person to certify who the descendants are. The custodian has no independent way to determine who they are, so it makes sense that they would require the certification by the executor.
Permalink Submitted by Alan Spross on Mon, 2008-04-07 04:12
However, this should be for ID purposes only, and once identified the beneficiaries will be considered as designated and therefore eligible for life expectancy RMDs.
Permalink Submitted by john jones on Mon, 2008-04-07 18:47
Certification is great, but I bet lot of folks who check this box have no idea they will have to open an estate to get it. Nowhere on the Vanguard form does it suggest that an estate will have to be opened.
Permalink Submitted by Bruce Steiner on Mon, 2008-04-07 20:57
In most cases, a decedent’s Will is admitted to probate in due course fairly soon after the person dies.
Permalink Submitted by Alan Spross on Mon, 2008-04-07 22:30
There is a general assumption that an estate will generally be opened due to state requirements. However, if the decedent or family arranged for most assets to pass by beneficiary designation, they may have planned to bypass this requirement or at least to be able to use whatever affivdavit or abbreviated procedures are available. In that case, the Vanguard requirement would be disconcerting. But I would not be surprised if Vanguard was not unique with respect to this requirement, since the potential for litigation or expensive discovery procedures here are obvious.
Permalink Submitted by Bruce Steiner on Mon, 2008-04-07 22:41
In most cases, our clients’ Wills are probated soon after death. Once in a while there is no need to probate the Will. But it’s generally no big deal to probate a Will.
If you’re leaving your IRA to or in trust for your issue (in other words, your children, with the share of a deceased child going to or in trust for the deceased child’s issue), the custodian can’t possibly determine who they are. So the beneficiary designation has to allow the custodian to rely on the certification of someone who is likely to know who the IRA owner’s issue are. The logical person is the executor or administrator.
If we were to have a case where an IRA owner left his/her IRA to or in trust for his/her issue, and we did not otherwise expect to probate the IRA owner’s Will, we would see (in advance) if there were some other way to satisfy the custodian as to the identity of the IRA owner’s issue. My guess is that there is some other way to satisfy the custodian. Perhaps they’ll accept the certification of the person who signs the Federal estate tax return as executor, even if he/she is not appointed as executor by a court.
I may actually have such a case in the near future — I met with a prospective new client today who fits that description.