[WSBAPT] Minors as Beneficiaries of an IRA

Thu Sep 6 14:20:10 PDT 2018

Yes, Legal Guardianship of the Estate is the usual requirement for assets inherited by minors. I gave a CLE on the topic last fall for the Workers Comp group as LNI sometimes will waive the guardianship requirement, but most other institutions will not (materials attached for your reference). You may inquire about it going into a custodial account but as Wells Fargo points out that would usually need to be designated in advance. I have had success establishing custodianship after the fact for life insurance proceeds, but not for an IRA.
Another interesting procedure might be a TEDRA Non-Judicial Agreement to amend the beneficiary form. I have had success with this where Edward Jones was the administrator of the IRA. I’m not sure how willing Wells Fargo would be to accept an amended designation by court order after the fact. To do this, you would need all of the beneficiaries of the estate to consent to changing the beneficiary of the IRA to be a custodian or a trustee for the benefit of the minors. Perhaps you could gauge the willingness of Wells Fargo to accept such a court order before embarking on the TEDRA route.

Best,
Nick Pleasants

Nicholas Pleasants
James Pleasants, P.C.
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From: Tom Pixton <tom at pixtonlaw.com>
Sent: Wednesday, September 05, 2018 3:17 PM
To: wsbapt at lists.wsbarppt.com
Subject: Re: [WSBAPT] Minors as Beneficiaries of an IRA

Yes,
This is why we write trusts for underage beneficiaries and direct the IRA benefits to those trusts.  In your case, Wells will likely have to release control of the inherited IRA at age 18 – not usually a good plan.
Tom
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From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of Mark Reinhardt
Sent: Tuesday, September 04, 2018 4:07 PM
To: 'WSBA Probate & Trust Listserv'
Subject: [WSBAPT] Minors as Beneficiaries of an IRA

Dear Listmates,

An IRA owner (grandfather) died, listing two minors (grandchildren) as beneficiaries.  Accordingly, the parents of the minors have reached out to Wells Fargo, the IRA custodian, to establish inherited IRAs for the minors.  Unfortunately, grandfather did not specify a custodian in his beneficiary designations.  Wells Fargo is taking the position that the parents need a Letter of Guardianship specifying that they are the responsible parties for handling the minors’ estates.

Has anyone run into this before?

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