Orphan Plan?

[Guest AFRICA6796]

When a sole proprietor dies, who takes over the duties of trusteeship?

Does the plan become and Orphan Plan?

Is the plan required to be terminated immediately since there is no longer anyone to continue the administrative duties?

Thanks

[Erik Read]

I went through this exact situation a few years back. The SP passed unexpectedly, leaving the business and employees high and dry. To further complicate the issue, his wife had passed just weeks before he.

The net result was, we found a distant relative, and went through legal council to have a court appoint the relative as successor trustee since the relative was the only living person able to administer the estate.

The plan had basically become a part of the estate, and would have eventually reverted to the State, if no heir was found.

Good luck.

[Guest AFRICA6796]

Thanks Eread,

If the spouse is the sole primary beneficiary, does he/she need to be appointed trustee by the court or would he/she be designated trustee by default. (Assuming no provisions are stated in the plan documents)?

Also, in the case you mentioned, do you think it had to go to court because they were not the designated primary beneficiaries?

Thanks

Aftrica

[Erik Read]

Hmmm - I posted a response last week, guess it didn't take.

In my specific case, the relative was the last found heir, otherwise the business and plan all would have gone to the State. The court needed to appoint the individual as the heir and at the same time, we had them appointed trustee.

I'd check with an ERISA attorney, but I'm sure what the law is for a beneficiary of a trustee. I don't see why they can't be the successor, however, for legal purposes, you'll want to check and get things done correctly.

Good Luck!