Estate Law Questions? Ask an Estate Lawyer.
Hi [USERNAME], I'm Thomas and will be happy to assist you. My goal is to make you a very satisfied customer! Thanks in advance for your patience.
I'm sorry to hear of your situation. I also wish I had good news for you, but unfortunately the law does not allow you a way to get to any assets that were left to your father's ex girlfriend by way of beneficiary designation. The law presumes that he intended her to be the beneficiary unless he made a change to the designation himself by signing a change of beneficiary form. Again, I'm sorry I didn't have good news about the law.
I was told by the IRA company that the account is with, that it is possible to obtain a court ordered beneficiary change.
No, not if your father has already passed away. The beneficiary can only be changed during his lifetime. There is actually a great deal of case law where family members have tried to argue that the person intended to change the beneficiary and just didn't have a chance to do it on the company's forms. The courts have still unanimously declared that if it's not done on the proper company forms during life it doesn't matter how much evidence there is of a contrary intent, they won't pay out to someone else.
I understand. All this still pertains to an IRA account? If I had her sign a document stating that she would turn the account over to me, would that hold up legally?
Yes, to an IRA account and other types of assets that carry beneficiary designations, like life insurance, some financial accounts, investments, etc.
If she is willing to give up the rights, she can sign a renunciation and disclaimer. Then if there is no alternate beneficiary, the funds go to your father's estate and from there to beneficiaries named in his will (or to his heirs if he doesn't have a will).
Got it, all the same. I am in control of the estate, not a court order but I am the only child. Is there a standard renunciation form?
Yes, the statute requires a specific form, filed in a specific way.
Thank you for the links. It says that California requires it to be filed within 9 months of death. Unfortunately it's been 5 years. I just found out about this account a couple days ago.
California, for example, requires that the renunciation or disclaimer form be filed within nine months of the decedent's death, or within nine months the inheritance becomes "indefeasibly vested," whichever is later.
I'm not sure what the "indefeasibly vested" means.
Oh, okay. Well she can still disclaim. It just won't be qualified. In that case, her disclaimer is treated as a gift from her. She would need to file a gift tax return and use part of her $5.25 million unified exemption for gift and estate taxes to prevent paying gift taxes.
Indefeasibly vested just means she's the undisputed owner with a current interest in the property, which is the case given she is the named beneficiary and your father has passed away.
I understand, for the most part. The only option for me would be to have her disclaim then have her close the account, is that right?
She would disclaim and it would go to the estate. It just wouldn't be a qualified disclaimer. Then you would deal with it as part of the probate process.
Is the renunciation form done through the IRA company, or the court? We never went through probate, I just inherited all the assets by being the only heir.
She would do it according to state and federal law and present an original or certified copy to the IRA company. Unfortunately, even though you are the only heir you have to complete a probate to officially transfer ownership of real property and, when the IRA or other property becomes part of the estate, other property that is part of the estate.
All his other accounts that she wasn't on were given to me without probate. This one wouldn't be the same because of the disclaimer?
Correct. The disclaimer would result in the IRA going to the estate and probate would be required. Alternatively, she could just close the account and gift the funds to you.
Is it possible to not file the disclaimer, and just have her sign a document between her and I that she promises to close the account and turn over the fund to me?
She could do that, yes. And it would have the same gift tax effect. Plus she would need to file an income tax return and pay taxes after closing out the account.
Would a contract between her and I be leglly valid? Or do I just have to assume on good faith that she will comply.
It wouldn't be legally enforceable because it's just a gift. A promise to make a gift is not legally enforceable unless you make a promise to do something as well. In other words, a valid contract has both parties promising to do something.
I see, that does make sense. Although I disagree that if she signs a contract saying she will do something, she should be held to that. Regardless of my doing anything in return.
I know, any promise should be legally enforceable, but unfortunately it is not.
But I understand, the law's the law. Could my "part" in the deal be of no monetary value? Or do they have to be deemed equal?
Any consideration is legally sufficient. As long as she agrees to one thing for you to do another. But that is separate from any valuation for gift tax purposes. With gifts, anything you get that you don't trade something of equal value for is deemed a gift so she'll still have gift tax issues.
I could recieve the money from her and pay the tax for her?
Looks like that's the best option. I appreciate your time and weeding through this ordeal with me.
You're very welcome. It's been a pleasure assisting you. Unless I can provide additional assistance, I would be grateful if you could please leave me a positive rating. Thanks so much and have a great afternoon and evening!
I absolutely will. You do the same. Thanks again!