Consent of Incompetent Spouse

[Guest Patrick Foley]

Q&A-27 of Treas. Reg. 1.401(a)-20 provides an exception from spousal consent rules where a legal guardian has been appointed for an incompetent spouse. Practically speaking, how does a plan deal with an incompetent -- or questionably competent -- spouse where the expense of going to court to appoint a guardian is prohibitive?

I would appreciate any thoughts.

[Guest b2kates]

You do not say, but it the cost is state specific. When you list questionably competent, it might make sense for the spouse to engage a psychologist to determine competency and if deemed competent, then execute consent.

Might there be a valid power of attorney?

[Guest Patrick Foley]

This is a low-paid, long-term employee of a charitable organization, with a very modest benefit. Guardianship would probably not be of much use to this couple because their financial affairs are simple. For the same reason it is very unlikely that a power of attorney or any similar instrument has been signed. The plan (my client) wants to find a way to, in substance, accept the participant's judgment on behalf of both spouses as to the best form in which to receive the benefit, but the "clean" route to this result -- court-ordered guardianship -- isn't practical.