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We have a situation where a participant died without completing a beneficiary designation form. In this event, the plan document says pay proceeds to the person's estate. The problem is that the person does not have an estate since the person had pretty much nothing. The cost to setup an estate would eat up the $800 or so due as a death benefit. Without an estate, we can't make the payment to the estate as the check could not be cashed except by the estate (or representyative thereof). Basically, create an estate for nothing, or have a check issued that can't be cashed! What we do have is called the "Durable Power of Attorney" which names his mother to have Power of Attorney. Powers granted include "authorization to manage and conduct all of my affairs", which also allows for opening and closing of accounts, including "retirement accounts". While this seems to be the answer, does this not violate the "nonalienation clause" where a person can not assign his or her rights? I suspect I amy be making too big of an issue, but I do believe that caution is merited. Should we just make payment to the Mom, who paid for his funeral, as beneficiary in light of the Durable Power of Attorney? Any and all comments are appreciated! Thanks!
