Thank you Ed,

I have 2 answers and 1 question below, and I apologize for the delay
in responding.


On Fri, 31 Oct 2003 15:46:13 CST, "Ed Zollars, CPA"
<ezollar[at]mindspring.com> wrote:

- quote -

The bank did NOT send me copies of the beneficiary forms for the 3
IRAs. I find this bizarre, because they asked me for a copy of my
wife's death certificate and a copy of my appointment as administrator
of her estate. Instead, they simply stated in a letter that the IRAs
were transferred to an IRA in my mother-in-law's estate. There were 3
accounts, thus I would expect to see 3 beneficiary forms bearing my
wife's signature. My wife was a VP in a large financial organization
and had previously worked for the bank in question for many years.
According to her meticulous records, the bank has 1 beneficiary
designation but not 3.

How can I make a factual determination of the bank's basis for paying
out those accounts if the bank does not cooperate? If they have valid
beneficiary designations I don't see any harm in giving me copies,
otherwise it looks suspicious. Perhaps they decided that since I'm not
the beneficiary, they don't have to talk to me. I don't want to throw
blanket accusations at the bank, but errors and corporate impropriety
is ever-present these days.

- quote -

My attorney works for a law firm that also represents the bank.
Moreover, one of his partners in the same law firm represents my
father-in-law. The second attorney has been very zealous in protecting
my father-in-law's interests, including the disposition of the IRA in
question. The 2 attorneys became adversarial in the matter of my
wife's estate. I found all this to be a conflict-of-interest and fired
my lawyer. I also reported the incident to the Massachusetts Office of
the Bar Counsel and they've agreed to examine the case. So, I'm on my
own for now.

- quote -

paminof wrote:

- quote -

Well, it can go to their estate.

- quote -

No. Her mother survived her, so the account transferred to
her at that date. The fact she died before it was
transferred to her control doesn't really change anything.
It was her asset, based on the beneficiary designation, upon
your wife's death.

- quote -

Correct as far as that goes. However, another person can
continue to be the beneficiary of the *original* IRA and
that IRA can be directly trustee to trustee transferred to
another custodian.

- quote -

Yes. At worst, had they blown the rollover it would have
taxable to the beneficiary and/or her estate. But, as I
noted above, assuming she unconditionally made the
beneficiary the money was hers the minute your wife passed away.

- quote -

There's no requirement for spousal consent for an IRA,
unlike *some* qualified plan balances. The law reference
you've given is missing a reference to the *title* of the
United States Code involved, but it certainly doesn't appear
to be Title 26 (the Internal Revenue Code) where IRAs are
dealt with for the most part (26 USC 1055(c)(2) deals with
redeemable ground rents). If you claim there is a section
that requires this, please come back with the Title of the
US Code in question.

The question of whether the other IRAs had beneficiary
designations is a factual one, and would involve both
determining if a designation had been filed, and whether the
bank's agreement provided that the original designation was
binding unless she made another one specifically for each
new account. As well, if no designation was made, the IRA
custodial agreement itself most likely had a default.

But, as I noted, that's a factual issue--you first have to
determine the bank's basis for paying out those accounts to
the mother and then determine if that was proper based on
either the designations or the custodial agreement.

- quote -

There's no spousal consent law on IRAs.

- quote -

If you've consulted an attorney, why are asking here? I
would presume, from his determination, that some facts
beyond those you've given here are in play.

--
Ed Zollars, CPA
Phoenix, Arizona

My wife died suddenly in March 2002 at the age of 49. We had a
combined statement of accounts at a local bank. Our joint monthly
statement included 3 small IRAs in my wife's name, total value approx.
$18k. In April 2003, my monthly statement showed a closing entry for
one of the IRAs, the other 2 seemingly vanished into thin air.

I recently wrote to the bank requesting a copy of the beneficiary
forms. They asked for a copy of my wife's death certificate and a copy
of my appointment as administrator of her estate. I provided both.
They didn't send me the beneficiary forms, instead they wrote back as
follows: "The beneficiary of (my wife's) IRAs was (her mother) and the
funds were transferred to an IRA in her name, now in her estate, in
April 2003." My wife's mother also died last year, 5 months *after* my
wife.

Q: Can an IRA be distributed to a deceased person, or their estate?

Q: Shouldn't the IRA have gone to the secondary beneficiary, if one
was designated?

I thought that only a surviving spouse can rollover an IRA to his/her
name without creating a taxable event, and that other beneficiaries
have to take a taxable distribution.

Q: Did the bank act legally in allowing a direct rollover of the IRAs
to a deceased person?

I've noticed that beneficiary forms require the spouse's consent in
order to name somebody other than the spouse as beneficiary, U.S.C.
§1055(c)(2). No such consent exists. The original IRA was created
circa 1984/5, before we were married, and the original beneficiaries
of record, according to the bank, are my wife's parents, mother as
primary (deceased), father as secondary (alive). The other 2 IRAs
were created subsequently, and I'm not sure if valid beneficiary forms
were ever filed. Each of the 3 IRAs has a different account #. Since
then, the bank has been sold to larger banks 2-3 times and a new bank
acquired custody of the IRAs.

Q: Was the new bank as custodian of the old IRAs required to have new
beneficiary forms in compliance with the new law requiring spousal
consent?

There's a bit more to this story, but I've tried to be as brief as
possible. I'd be happy to expand if questions arise. My lawyer told
me last year that my wife's father was the valid beneficiary, and that
in recognition of the circumstances he intended to disclaim the IRAs
by allowing the "determination date" of September 30, 2003 to expire.