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Question(s) about distribution of mutual funds to beneficiaries:
A friend (who is disabled by stroke) is a beneficiary, along with her brother, of non-retirement mutual funds ($11,000+/-) of their deceased mother (passed away in CA in 2012). A CFP is assisting the brother in paperwork to request the funds. CFP says they are equal beneficiaries, and that likely a dual-party check will be issued to them, but possibly checks could be issued to each of them – he’s not sure.
The siblings live in different states and the sister (in CA) doesn’t trust her brother (in NM). Brother knows the CFP – who is helping out as a friend, and not charging a fee.
The executor is being non-responsive lately. CFP’s ‘attorney friend’ suggests to try to avoid the legal costs of obtaining a new executor. CFP hopes that if both/all beneficiaries sign paperwork, Eaton Vance org will be satisfied. He has sent multiple forms for my friend’s signature (Redemption and Re-Registration Authorization forms).
CFP says there is a will; not a trust. My friend has never been given a copy of will, but apparently it is being mailed to her now (because she complained to CFP that she had not ever received it, and also doesn’t trust her brother, etc).
Questions –
Are there common practices in distributing beneficiary funds – or any likelihood that a check might be issued to EACH equal beneficiary?
Are there options for handling this type of thing? Escrow accounts?
Was the account registered as a TOD account (transfer on death) in which both were named beneficiaries or are they inheriting the account via the will?
If TOD, mutual fund company will split the account registering in equal shares to the beneficiaries (or whatever the percentage was). From there, they can each hold or sell..their individual decision. This can be done by beneficiaries...executor not needed.
IF via will, account will most likely be retitled to estate account and then from there executor could instruct the mutual fund company to issue and send checks to each beneficiary. Or the executor could redeem the account, deposit check into estate bank account, and issue checks from there to the beneficiaries. The mutual fund company will not accept any authorizations other than the executor's.
The money would not pass through the probate estate and a will has no bearing on the mutual funds.
I would call the mutual fund (if you have account number that will help) and ask them to confirm that you are a beneficiary on the account. Tell them you want the money set to you. You should be asked to furnish a copy of the death certificate (you can obtain from the local court in the town the deceased person lived in. Probably 5 or 10 dollars) and probably something proving who you are.
The money would not pass through the probate estate and a will has no bearing on the mutual funds.
I would call the mutual fund (if you have account number that will help) and ask them to confirm that you are a beneficiary on the account. Tell them you want the money set to you. You should be asked to furnish a copy of the death certificate (you can obtain from the local court in the town the deceased person lived in. Probably 5 or 10 dollars) and probably something proving who you are.
If it is not registered as a TOD account, what you said is not true.
Was the account registered as a TOD account (transfer on death) in which both were named beneficiaries or are they inheriting the account via the will?
If TOD, mutual fund company will split the account registering in equal shares to the beneficiaries (or whatever the percentage was). From there, they can each hold or sell..their individual decision. This can be done by beneficiaries...executor not needed.
IF via will, account will most likely be retitled to estate account and then from there executor could instruct the mutual fund company to issue and send checks to each beneficiary. Or the executor could redeem the account, deposit check into estate bank account, and issue checks from there to the beneficiaries. The mutual fund company will not accept any authorizations other than the executor's.
Thank you for your reply and info!!
I'm not sure (TOD or via will) - but I suspect it's via will. I've seen a statement (only shows the mother's name), but I also suspect that info isn't commonly on account activity statements.
On the Eaton Vance paperwork, the CFP has checked a box "Beneficiary named on account", however, in a text/memo exchange he states, "It was suggested that if we could show Eaton Vance that you and xxx were the only beneficiaries, they may release the money.... They may not do it at all without a new executor, but I think it is worth trying to avoid spending money." (meaning, spending money to pay attorney to go to court and change the executor.)
make sure your state accepts tod accounts on brokerages . for the longest time here in ny banks could use tod accounts but not brokerages .brokerages let you set them up but when the time came to pass money heirs found out the state wouldn't allow it so it had to go through probate .
i would have thought brokerages would have known which states were issues but i understand that it can be quite complex as to if the brokerage has an office in the state or not so it can change at anytime as the brokerage opens offices .
finally ny changed . but and a big but , make sure you keep up to date on all your legal paper work .
New York State passed legislation effective September 2009 in an attempt to create a statutory form that would be uniformly accepted. This legislation was the result of tremendous abuse that was found in this particular area, with some appointed agents taking advantage of the disabled and elderly.
The new power of attorney law results in a much lengthier document, and significantly restricts the actual power given to the agent over financial matters. If transfers are to be made on behalf of the principal, a separate gift rider must be executed. The gift rider must specifically articulate the agent’s power to make gifts to himself/herself or to third parties. Further, any additional powers beyond those enumerated in the statute, must be added to a modification section. Finally, while the law mandates banks, brokerage houses and other financial institutions to recognize the power of attorney, the form utilized must be statutory. Accordingly, if someone decides to cut corners and download a form from the internet if the form is not statutory, it does not have to be legally recognized
If it is not registered as a TOD account, what you said is not true.
You could be correct, what state is this true in. My understanding is that the beneficiary designation keeps the funds out of the probate estate. I assumed all 50 states but my experience does not cover all the states and I would like to learn which ones are exceptions.
You could be correct, what state is this true in. My understanding is that the beneficiary designation keeps the funds out of the probate estate. I assumed all 50 states but my experience does not cover all the states and I would like to learn which ones are exceptions.
My point was that non-qualified accounts typically don't carry beneficiary designations (unless an annuity or some such product) unless it has the TOD registration. If it doesn't, the beneficiaries of the money per the will just can't call up the mutual fund company and tell them to "send me my money." The mutual fund company has no clue who the beneficiaries are and can only take instruction from the representative of the estate.
It all hinges around whether or not this was a TOD account.
You could be correct, what state is this true in. My understanding is that the beneficiary designation keeps the funds out of the probate estate. I assumed all 50 states but my experience does not cover all the states and I would like to learn which ones are exceptions.
i know texas is one that can be trouble with tod accounts and brokerages , not sure about who else but there are others .
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Transfer-on-death registration for securities
Texas does not let you register stocks and bonds in transfer-on-death (TOD) form.
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Transfer-on-death deeds for real estate
Beginning September 1, 2015, Texas allows you to leave real estate with transfer-on-death deeds. These deeds are sometimes called beneficiary deeds. You sign and record the deed now, but it doesn't take effect until your death
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