Death Benefit - No Designated Beneficiary

[Guest wolfman]

Deceased Participant was single and the plan administrator has no beneficiary designation. The plan document states that in this case the distribution goes to the estate of the deceased. The sister of the deceased informs the plan administrator that the deceased had no will, and that the legal costs of establishing an estate for this purpose would be more than the amount of distribution. Is there a solution that would allow the plan administrator to be sensitive to the issue but keep the plan in compliance? Thanks.

[rcline46]

There is always an estate whether a will or not. All states have intestate laws (where there is no will). Plan admin must follow the state rules, or give the money to the local court to distribute (interpleader).

[Guest wolfman]

Thank you. Would that be the intestate laws of the beneficiary's state of residence?

[Guest wolfman]

Sorry. I assume it's the deceased participant's state of residence that applies. But should it be up to the plan administrator to interpret these laws in order to make the distribution? Thanks again.

[rcline46]

All laws should be interpreted by an attorney. It wouldn't hurt the administrator to look at them, but that is why the distribution should be given to the court.

[david rigby]

Might also be worth pointing out that the plan administrator is charged with upholding the terms of the plan. Most plans authorize the PA (or committee) to seek its own legal advice when needed.