• FreeAdvice has a new Terms of Service and Privacy Policy, effective May 25, 2018.
    By continuing to use this site, you are consenting to our Terms of Service and use of cookies.

IRA Beneficiary Designation/TOD Not Honored

Accident - Bankruptcy - Criminal Law / DUI - Business - Consumer - Employment - Family - Immigration - Real Estate - Tax - Traffic - Wills   Please click a topic or scroll down for more.

ImAhoosier

Junior Member
I live in Northern Indiana. My father passed away this summer and I was left executor of his estate. There was no life insurance, so I contacted his so called "financial adviser" to inquire on status of his account with them. The assistant there expressed her sympathy and said that my Father adored his daughters and was always talking about us...etc. I was informed my father had a Transfer on Death contract put on his IRA, which designated my sister and I as beneficiaries. (I've since been told that an IRA is only setup to have beneficiaries, not Transfer on Death Agreements?) Two days later I was even given a Date of Death statement of his account with the required list of documents we would need to have funds released.

One month later I contacted the adviser once again to see about having funds released. I explained to them I needed to loan a portion of funds to my Father's estate. My estate attorney drew up the release form, my sister and I both signed it, the city's assessor's office signed and stamped it, and I delivered it to the office that day. My sister and I also completed the paperwork required to setup our own decedent's IRA's as well. I was told upon leaving that day that I could expect a check in aprox. 2 weeks.

A little over a week later I was contacted by the adviser's office. The assistant informed me that my Father set up his account with them in 2004 and had 4 beneficiaries listed for the TOD, and had CALLED in sometime in July- September of 2008 and requested to change his TOD designations to just two, my sister and myself. BUT- he never signed and returned the updated TOD contract, so they go back to the original that they have on file for him which is divided four ways. She said that their office showed only two, but the corporate office never got the signed contract back so they would not allow them to honor the change.

We were outraged. I began going through the statements and came across a Yearly Dues statement. This statement is from September 2009, Directly from the investment company's Corporate Office. The first page gives options of paying your yearly dues, and the second page listed the beneficiaries they have on file for his account. I called the adviser's office back immediately and inquired about why the Corporate office would have sent him this statement, which showed his change to only the two beneficiaries if that was Not In Fact the information they had. The assistant said that a TOD is a binding contract, and that if the updated TOD was never signed and returned that she didn't believe there was anything that could be done about it, I told her to try. Two weeks later the assistant called me back and said there was nothing they could do to correct the issue.

I filed a formal complaint with the investment company's corporate office. I've filed a complaint with FINRA, and the SEC. FINRA did look into the matter and determined pretty much nothing. I received a letter that explains they contacted said "Adviser" and he does recall shortly after my grandmother's passing, that my Father called in and requested to change his IRA TOD beneficiaries to myself and my sister. AND, unless the other two beneficiaries will disclaim the IRA, that they WILL honor the last signed agreement they have on record. Which I've already met with the other two said beneficiaries who are my cousins, and they simply lost all sense of moral and values when they learned they were getting money.

I want to know how this is acceptable? You pay Financial Advisers because you either don't know anything about investments, or you just don't have the time to manage your own. My Father and this "Adviser" had previously been co-workers for a number of years as well as friends, though clearly he did my Father No favors. What are my rights in pursuing this further, and how do I go about doing this?
 
Last edited:


Hot Topic

Senior Member
First of all, I would suggest taking the company name out of your post. They could decide to take legal action since people are getting one side of the story.

I don't know of any law that states that changes that aren't made in writing are valid. I also don't know of any law that states that a document that wasn't signed and wasn't received still has to be considered valid. Maybe someone else has.

If you're listed as a beneficiary, you should be entitled to those monies. If something happens to me, my brother is listed on the bank POD (Payment on Death) so he doesn't have to go to court and prove he's entitled to the money in my account.
 
Last edited:

davew128

Senior Member
You don't have a leg to stand on. It is the IRA owner's responsibility to make sure the beneficiary designations are what he/she wants. If the changes are not made in writing in a manner the custodian prescribes, well...tough luck. It's not the custodian's responsibility or fault your late father didn't sign and return the forms.

Also suggest your understanding about what the role of a "financial advisor" is, is grossly mistaken.

Trust me, I see stuff like this all the time as a tax guy and my response is, it's YOUR responsibility to follow through on your IRA registrations, not mine.
 

ImAhoosier

Junior Member
Yes, someone else has.

First of all, I would suggest taking the company name out of your post. They could decide to take legal action since people are getting one side of the story.
No.?23785-1-III. - IN RE: the ESTATE OF Lon E. FREEBERG - WA Court of Appeals

Good for you, and your brother that you have your situation secured. This isn't just a matter of an intent to change beneficiaries though, it's hugely a matter of the investment company lying to their clients.

I understand where your coming from, I've done my research too. I found this article to be of great interest. Though it is not 100% identical in circumstances, it is a quite similar. -From what I've learned about Indiana law concerning this type of issue is that I would have to prove that my Father did everything in his power to complete the beneficiary change prior to his passing.

The investment company allows clients to call in and make beneficiary changes over the phone, though such changes are really only valid upon receiving the new signed designation form. That being the case -why would anyone as financial adviser go ahead and make the requested changes to a client's account prior to receiving the required documents for it to be legitimate?

I don't feel that I need to prove anything in terms of if my Father did everything in his power to complete the change or not. The problem is that the investment company's corporate office was sending him yearly statements that stated the changes were made. The local branch adviser's office also showed on his account that the change was made.

Considering he did not sign and return the change of beneficiary form I understand why you responded as you did. However, the investment company has no records to show that the documents were ever sent out to begin with.

It's not an issue as to if my Father did everything in his power to complete the change prior to death or not. The investment company made the changes and were sending him statements that reflected those changes. My Father had no reason to believe that his beneficiary designations were anything but what the statements he was being sent reflected. This Adviser made a formal statement that he did recall the conversation with my Father, at which time he requested to change his beneficiary designations. (Much like in Freeberg) He requested the change back in 2008, which means that his account went two years showing the beneficiaries HAD already been changed.
 

Find the Right Lawyer for Your Legal Issue!

Fast, Free, and Confidential
data-ad-format="auto">
Top