Trustee Making Claim to IRA Funds
Apparently one of our clients has passed away and the trustee of what is claimed to be the client’s family administrative trust came into one of our offices to have the funds disbursed to an account for this trust. Our client had named his wife as the sole beneficiary, however the trustee has provided a death certificate for her as well. The client never named his trust as the beneficiary of the IRA and until now we have no record of this trust. The trustee claims that there will be no executor for the client’s estate and all financial matters will be handled by him.
In the past when the estate has been the only remaining beneficiary and the size of the estate is small enough to bypass probate we have required a small estate affidavit. In this situation I believe the trustee is trying to claim that the IRA is already the property of the trust and feels he does not need to submit anything beyond the certification of trust.
I am running this by our legal department but I thought I would post this situation here to see what others might feel is needed in order to close this IRA.
Permalink Submitted by mk foss on Fri, 2008-10-31 23:03
Your caution is justified. If there is no living named beneficiary, the IRA custodian agreement controls. That agreement normally will name the decedent’s estate. If there is no probate estate, the “trustee” will need to open one.
You can’t transfer the funds without a court order or small estate petition.
Permalink Submitted by Bruce Steiner on Sun, 2008-11-02 14:02
The trustee is probably wrong. If the default beneficiary is the estate, the IRA custodian won’t release the IRA to anyone other than the executor or administrator of the estate (with a possible exception if the amount involved is very small). Someone who would benefit under the Will (or by intestacy if there is no Will) will probably petition to become executor or administrator to gain access to the IRA.
Permalink Submitted by Jose Morales on Tue, 2008-11-04 16:56
Thanks guys! Our legal department and outside counsel have all confirmed that I am taking the right course of action in this situation.