The Omitted IRA Beneficiary; What Can Be Done?

By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold, NJ Estate Administration Attorney

Recently new clients come to me with a dilemma regarding their mother’s IRA.  Both are sisters, yet the mother only named one of them as beneficiary to her IRA.  The mother died with no other assets, yet it is clear the mother intended to have both daughters share everything equally through her will.  The daughter who received the IRA wanted to split it with her sister, and have her set up her own IRA in a tax beneficial way but neither knew how to do this.

We advised the one sister to disclaim 50% of the IRA.  This portion disclaimed then goes to the mom’s estate.  Thereafter we will petition the surrogate’s court to appoint one sister executrix of the estate, and present that paperwork to the custodian of the IRA to gain access to the disclaimed funds.  The one sister can then renounce her interest in administering the estate, allowing the other sister to become executrix.  Once the appointment occurs, the estate IRA can be set up and the forgotten sister will have access to her own IRA with the funds her mother intended her to get.

If a similar situation happens to you, first ensure that the will says that everybody receives the remaining assets equally.  Have the named beneficiary disclaim their respective interest in the estate.  Then figure out who is going to administer the estate.  If there is no will, you will need to have somebody bonded for the total value of the account.  Optimally, you will want an administrator who is not a named beneficiary.  Every other sibling must then renunciate all rights to administer the estate and appoint the sibling who wishes to administer.  Once the sibling is appointed, the sibling can present the paperwork authorizing him or her to access the money and can give the other siblings their fair share of money.

To discuss your NJ Estate Administration & Probate matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com.  Please ask us about our video conferencing consultations if you are unable to come to our office.