IRA and bank issue

[Zenniezou]

What is the name of your state? MN

Hello. Background: My dad passed away in Jan 23. I am the Executor. The only assets in the estate are the house and 2 low value cars. My brother was listed as co-owner on his checking account (and has managed to blow $25k on vet bills when his 2 dogs got hit by a car. They are recovering and doing well). Anyhow, the county filed a $20,000 demand against my dads estate for the time my mom was in a nursing home in 2009. It sucks, but I don't dispute this needs to be paid. We are trying to keep the house (no mortgage) because my dads main wish was that my brother would always have a place to live. The house was left 33.5% to younger brother and 13.3% to each of the other 5 kids. All 5 of us other siblings have agreed to do what we need to do to keep my brother living there and postpone their share. My brother cannot afford to take out a loan.

From what I understand, the county can force the sale of the house if they don't get paid. My dad had an IRA worth way more than enough to cover the $20k and the withdrawal taxes. I believe that my brother is 40% beneficiary and I am 20% with 2 of my sisters having 20% each. My brother and I will use our portion to pay the bill. If we can ever get the money. A very, very large national bank is the administrator of the IRA. I started the process of closing it out in March with a visit to the bank providing them the death certificate and account info. After multiple follow ups and no response, I went into another branch and met with the branch manager. I provided him all the paperwork - death certificate, my appointment as executor, a previous beneficiary statement and the current account information. He promised he'd help. But has not responded to my calls or emails. I am trying to avoid getting the lawyer involved unless absolutely necessary because I am now paying out of pocket for the lawyer fees. What needs to be done to get the process moving? Would a strongly worded letter from the attorney help? Is there something I can file somewhere to get the bank to comply and close the account out? I believe that the money will need to be transferred to another IRA and then cashed out, so the process isn't quick. The county has agreed to take no action for an indeterminate amount of time, and won't say what the time frame is.

I've contacted the main number for the bank several times but have been told that this needs to be handled at the local branch level because the big bank bought the smaller bank my dad used and all accounts were transferred to the larger bank. I've been to two local branches and talked with 2 different branch managers. I don't know what else to do. How can I get the bank to move forward with dismantling the IRA? Any advice? Please and thank you!

 

[Zigner]

If it were me, I'd be camping in the branch lobby until I got some substantive action.

 

[Zenniezou]

If it were me, I'd be camping in the branch lobby until I got some substantive action.

Tempted, but I'm trying to not get arrested. The bank is in a small town right next to the police department, court house and county jail.

 

[Taxing Matters]

What is the name of your state? MN

What needs to be done to get the process moving? Would a strongly worded letter from the attorney help?

It might. You might also get results by going higher up the corporate food chain than a local branch manager. Contacting the bank's legal department might also get you some traction.

Is there something I can file somewhere to get the bank to comply and close the account out?

You may make a written complaint to the state banking department and to the state's primary regulator, if it's different from the state's primary regulator. The primary regulator for the vast majority of banks (something like 97% of banks) is a federal agency, not the state. You can find your bank's state regulator from a list provided by the federal Consumer Financial Protection Board (CFPB). Which federal regulator you'd contact depends on the type of banking institution it is. If the primary regulator is a federal agency, a search option provided by a federal website called HelpwithMyBank.gov can help you determine which one it is. This page is maintained by the Office of the Comptroller of the Currency (OCC), which is one of the federal bank regulators.

Be aware that distributing the IRA funds will end up being taxable income to the IRA owners. You will want to take that into account when deciding what to do and how much money to take out.

 

[adjusterjack]

my appointment as executor,

Appointed by the court, or just nominated in the will?

I've been to two local branches and talked with 2 different branch managers. I don't know what else to do.

Many banks have an estate department where specialists handle that kind of thing. Go on the bank's website and see if you can find a link to it. If not readily apparent try the "site map" usually at the bottom of the home page.

 

[commentator]

The situation you describe here has made absolutely no sense at all to me from the beginning. Let's see. Your mother was in a nursing home in 2009, let's see.... fifteen years ago. "The county" is going to take your house if the bill is not paid. They have filed a demand letter when your father passed. Your father had over $25,000 in his checking account when he passed away which your brother has piddled away on his sick dogssince his passing. But you are trying to get your hands on the IRA, so you can pay off "the county"?? ( once again, I really have questions about that!) a certain amount, or they can take the house. Okay, did your parents sign the house over to the Medicaid program in 2009? If so, that's not going to be something you can pay off quickly and easily. Why had your father not paid it off in the last 15 years if he was so determined to give the house to your brother, knowing this debt was on the house from "the county" for his wife's medical care? I think you may be actually barking up the wrong tree in the whole situation. Desperately think you need to be talking to whoever you think it is that is wanting the money from your mother's care, making sure that you can pay off this bill with the IRA money, or from any source, and that the house has not been signed over to Medicaid at some earlier point.

 

[AlmostThere]

It maybe a good time to seek advice from an estate attorney.

 

[LdiJ]

The situation you describe here has made absolutely no sense at all to me from the beginning. Let's see. Your mother was in a nursing home in 2009, let's see.... fifteen years ago. "The county" is going to take your house if the bill is not paid. Your father had over $25,000 in his checking account which your brother has piddled away on his sick dogs at the time of his passing. But you are trying to get your hands on the IRA, so you can pay "the county"?? once again, I really have questions about that, a certain amount, or they can take the house. Okay, did your parents sign the house over to the Medicaid program in 2009? If so, that's not going to be something you can pay off quickly and easily. Why had your father not paid it off in the last 15 years if he was so determined to give the house to your brother, knowing this debt was on the house from "the county" for his wife's medical care? I think you may be actually barking up the wrong tree in the whole situation. Desperately think you need to be talking to whoever you think it is that is wanting the money from your mother's care, making sure that you can pay off this bill, and that the house has not been signed over to Medicaid at some earlier point.

They want to keep the house for brother to live in because that is what dad wanted. Brother's name was on the checking account that had $25,000 in it so legally it became his property when dad died, so that is how he was able to spend the money on his dogs (even though it might have been a foolish thing to do). Medicaid does not force you do sell your house when you need nursing home care if there is another spouse or previously caretaking family member living in it. They hold off taking the asset until the person living in it also passes away or sells the house. Dad has now died, so medicaid now getting their $20,000 out of the house is fair game. They CAN force the sale of the house to make that happen. All of the siblings who are IRA beneficiaries are willing for the IRA money to go towards settling the medicaid lien so that brother can still live in the house. (although THAT may be a foolish thing to do since the beneficiaries will all have to pay taxes on their share). The bank, for some reason, is not moving on the IRA which tells me that there is something going wrong in the process. Camping in the bank lobby until someone at least explains what the problem is is not necessarily a bad idea.

 

[Taxing Matters]

Desperately think you need to be talking to whoever you think it is that is wanting the money from your mother's care, making sure that you can pay off this bill with the IRA money, or from any source, and that the house has not been signed over to Medicaid at some earlier point.

Medicaid does not get title to the home until it asserts its claim in the probate process. States will happily take cash offered to pay off the Medicaid lien rather than having to enforce the lien, which costs money.

 

[Zenniezou]

They want to keep the house for brother to live in because that is what dad wanted. Brother's name was on the checking account that had $25,000 in it so legally it became his property when dad died, so that is how he was able to spend the money on his dogs (even though it might have been a foolish thing to do). Medicaid does not force you do sell your house when you need nursing home care if there is another spouse or previously caretaking family member living in it. They hold off taking the asset until the person living in it also passes away or sells the house. Dad has now died, so medicaid now getting their $20,000 out of the house is fair game. They CAN force the sale of the house to make that happen. All of the siblings who are IRA beneficiaries are willing for the IRA money to go towards settling the medicaid lien so that brother can still live in the house. (although THAT may be a foolish thing to do since the beneficiaries will all have to pay taxes on their share). The bank, for some reason, is not moving on the IRA which tells me that there is something going wrong in the process. Camping in the bank lobby until someone at least explains what the problem is is not necessarily a bad idea.

Thank you, that is much clearer than my explanation. My dad filed a hardship waiver when my mom went into the nursing home. So, there was not an actual debt until he passed away. He would have paid it if he had known. My brother has no common sense and is likely not capable of taking care of himself, which is why my dad mentioned several hundred times that we needed to make sure he will be taken care of. I know that cashing out the IRA is not the smartest thing to do, but at this point I don't see another option that doesn't involve selling the house. My brother would not be able to rent an apartment since he has his disabled girlfriend, 2 dogs, 2 cats and 28 tarantulas. I would let my brother live with me if there was no other option, but not his girlfriend or pets.

I guess I'm camping out at the bank. I'm just really frustrated with everything. I appreciate your time.

 

[Zenniezou]

Appointed by the court, or just nominated in the will?



Many banks have an estate department where specialists handle that kind of thing. Go on the bank's website and see if you can find a link to it. If not readily apparent try the "site map" usually at the bottom of the home page.

Appointed by the court. I have talked with the banks investment department and just about every other department they have. They have all referred me to the local branch.

 

[Zenniezou]

It might. You might also get results by going higher up the corporate food chain than a local branch manager. Contacting the bank's legal department might also get you some traction.



You may make a written complaint to the state banking department and to the state's primary regulator, if it's different from the state's primary regulator. The primary regulator for the vast majority of banks (something like 97% of banks) is a federal agency, not the state. You can find your bank's state regulator from a list provided by the federal Consumer Financial Protection Board (CFPB). Which federal regulator you'd contact depends on the type of banking institution it is. If the primary regulator is a federal agency, a search option provided by a federal website called HelpwithMyBank.gov can help you determine which one it is. This page is maintained by the Office of the Comptroller of the Currency (OCC), which is one of the federal bank regulators.

Be aware that distributing the IRA funds will end up being taxable income to the IRA owners. You will want to take that into account when deciding what to do and how much money to take out.

Thank you so much! I know that the IRA funds will be heavily taxed. I wish there was another option.

 

[adjusterjack]

I know that the IRA funds will be heavily taxed.

Have a tax pro run the scenarios for you. You might be surprised how little impact the taxes on $20,000 will lbe, especially divided among multiple beneficiaries.

I wish there was another option.

How about a HELOC on the home for $20,000. Payments on that amount won't be too painful.

Appointed by the court.

Then you should be able to get a court order compelling the bank to cooperate.

medicaid now getting their $20,000 out of the house is fair game.

Medicaid will sometimes accept a lump sum discounted settlement as full and final to avoid the delay and cost of litigation. Don't ask if they will, just offer the cash and see what the response is.

 

[Zenniezou]

It maybe a good time to seek advice from an estate attorney.

I've already pai

Have a tax pro run the scenarios for you. You might be surprised how little impact the taxes on $20,000 will lbe, especially divided among multiple beneficiaries.



How about a HELOC on the home for $20,000. Payments on that amount won't be too painful.



Then you should be able to get a court order compelling the bank to cooperate.



Medicaid will sometimes accept a lump sum discounted settlement as full and final to avoid the delay and cost of litigation. Don't ask if they will, just offer the cash and see what the response is.

Thank you! You’ve given me some options to explore. I’ll have to figure out how much cash I can pull together. And then explore a HELOC. I was blessed with 2 fantastic parents and am determined to honor my dads wishes. I appreciate your time in responding.

 

[commentator]

Thanks, using the term 'the county" instead of the Medicaid program was confusing me. It is a lot clearer now. I am thinking that the other heirs or joint owners of this house will definitely be the ones responsible for paying the taxes, etc, from now on to make sure your brother and his menagerie can keep a contining place to live. You are a good person, I hope you can figure out a way to get this done as easily as possible.