No beneficiary designation

[Guest dianej1]

I have a profit sharing plan where the participant died, with no beneficiary form. He has no spouse and no children. His parents are all he has. Do the funds get dispersed to his estate or directly to the parents? What if there is no estate?

[david rigby]

Perhaps this is a perfect example of "what does the plan say?"

It is very common for a plan to include language that would answer the question "what happens if the participant dies without a beneficiary".

[Guest dianej1]

The document states that if the participant has no surviving children or spouse then distribution will be made the the Participant's estate. Out of 14 years of administrating retirement plans, I've never had to deal with this issue. So the check issued would be payable to "the estate of Mr. participant" and can the parents cash this?

[E as in ERISA]

The money would generally be payable to "The Estate of ..."

Legal ownership is then transferred to an individual through a court proceeding known as "probate."

If there was a will, it should specify who the beneficiaries of the estate are and who is named as the executor (the person who is responsible for overseeing the estate as it goes through the probate process).

If there is not a will, then state law will specify who the beneficiaries are and how an administrator is appointed.

In either situation, someone has to oversee the process of filing with the court system and overseeing the collection and distribution of assets.