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For an IRA, does a custodian require (or permit) a spouse’s consent to a beneficiary designation?


Peter Gulia
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For an Individual Retirement Account not held under an ERISA-governed plan:

Does any IRA custodian require a spouse’s consent as a condition to the custodian’s willingness to follow a designation that names a beneficiary other than the IRA holder’s spouse?

Does any IRA custodian have in its form a spot for recording a spouse’s consent to a beneficiary other than the IRA holder’s spouse?  (Even if no public law requires this.)

For either question, if you know any, please name names.

What I’m looking for is whether an IRA custodian does something, before there is a dispute or claim, to protect the community-property rights of an IRA holder’s spouse (or make it convenient for an IRA holder to show her spouse’s consent to a potential transfer).

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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Thanks.  With a little (unscientific) web-surfing, I found these:

BlackRock

Disclaimer for Community and Marital Property States:  The Participant’s spouse may have a property interest in the account and the right to dispose of the interest by will.  Therefore, any sponsors, issuers, depositories and other persons or entities associated with the investments and the Custodian specifically disclaim any warranty as to the effectiveness of the Participant’s beneficiary designation or as to the ownership of the account after the death of the Participant’s spouse.  For additional information, please consult your legal advisor.  I consent to the Beneficiary Designation.

{block on the form for a spouse’s consent}

https://www.blackrock.com/us/individual/literature/forms/ira-application-fillable-version.pdf

Capital Group (American Funds)

We encourage you to consult an advisor regarding the tax-law and estate planning implications of your beneficiary designation.  . . . .

Your spouse may need to sign in Section 9.  If you wish to customize your designation or need more space, attach a separate page.

Spousal consent to beneficiary designation — if required

If you are married to the IRA owner and he or she designated a Primary Beneficiary(ies) other than you, please consult your financial advisor about the state-law and tax-law implications of this beneficiary designation, including the need for your consent.

I am the spouse of the IRA owner named in Section 2, and I expressly consent to the beneficiary(ies) designated in Section 6 or attached.

{signature block}

Fidelity Advisor

If your IRA contains community property and you do not designate your spouse as primary beneficiary for at least 50% of your IRA, you may want to contact an attorney for further information on the designation.

https://institutional.fidelity.com/app/literature/view?itemCode=B-IRAFORMS&renditionType=pdf&pos=contentItem&selectedActivities[0].selectedActivityCode=TBNM&selectedActivities[0].selectedActivityTx=formsandapplications&selectedActivities[1].selectedActivityCode=DEPT&selectedActivities[1].selectedActivityTx=FAPP

Franklin Templeton

If you are married and designate someone other than your spouse as your primary beneficiary, you may need to obtain your spouse’s consent.  You should consult with a legal advisor regarding your beneficiary designation and whether your spouse’s consent is necessary.  The Custodian is not responsible for determining whether your spouse’s consent is necessary.

https://www.franklintempleton.com/forms-literature/download/RIRA-APP

{No block on the form for a spouse’s signature}

Invesco

{warning, and block on the form for a spouse’s consent}

https://www.invesco.com/us-rest/contentdetail?contentId=3868e01e98630410VgnVCM10000046f1bf0aRCRD

Schwab

If I live in a state with community property statutes and do not designate my spouse as the sole Primary Beneficiary, I represent and warrant that my spouse has consented to such designation.

https://www.schwab.com/public/file/P-1770982

TD Ameritrade

{IRA applicant “represents and warrants” to the custodian that the spouse consents.}

https://www.tdameritrade.com/retail-en_us/resources/pdf/TDA586.pdf

Wells Fargo

warning, and permits opportunity for a spouse’s signature

https://www.wellsfargofunds.com/assets/edocs/form/ira-application-ip.pdf

 

Any BenefitsLink neighbors with a different experience or observation?

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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Thank you for the kind words.

There is at least one point in common:  None of these custodians requires, as a condition to allowing an IRA holder to name a beneficiary other than the holder’s spouse, delivery to the custodian of the spouse’s consent to the beneficiary designation.

 

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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  • 2 weeks later...
On 2/9/2021 at 7:00 PM, Peter Gulia said:

There is at least one point in common:  None of these custodians requires, as a condition to allowing an IRA holder to name a beneficiary other than the holder’s spouse, delivery to the custodian of the spouse’s consent to the beneficiary designation. 

Peter, I have come across one. Goldman Sachs's brand new Marcus-branded IRA. For a Texas resident it says you have to name your spouse unless you get spousal consent. They say to call them if you need help with that. Note that I live in Texas and I think (but have not researched in 20 years) that the actual rule is that you can name anyone you want, because the property is under your control, but up to half may be community property and therefore a state court could, after death, enforce the community property interest. Presumably they're trying to eliminate legal fees and uncertainty for all parties be requiring this to be dealt with up front. And of course it's hard to get in all the good stuff on a form that someone's filling out on an iPhone app, although the obvious advantage of the app is that it knows where you live and can present you with a tailored set of rules.

Luke Bailey

Senior Counsel

Clark Hill PLC

214-651-4572 (O) | LBailey@clarkhill.com

2600 Dallas Parkway Suite 600

Frisco, TX 75034

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Luke Bailey, thank you for this helpful information.

Since 1994, my Beneficiary Designations chapters in Wolters Kluwer’s Answer Book have included explanations about community property.  In this year’s update, I’m adding a Q&A on how much a custodian requires or warns about community-property rights of the spouse who is not the participant or IRA holder.

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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