Participant died, no beneficiary form on file

[truphao]

I have never dealt with this before.   Also, not sure if I should have posted this in "Distribution" or in "Estate Planning".

Here is the situation.  A NHCE participant has passed, never returned a Beneficiary Designation form.   The CB is < $1,000.  What paperwork the client should have in place in additional to a "normal" distribution package?  What should be the process to disburse the funds? I am thinking:

1) Some kind of documentation regarding the estate trust

2) Documentation regarding who the trust administrator is

3) Money should be payable directly to estate with the estate administrator being signatory after the paperwork is on file

4) Anything else I need to thinking about?  You do not know what you do not know

[Effen]

Read the plan document.  It should describe what should happen in this situation.  Refer it to ERISA counsel.  

Typically the document says the benefit will be paid "per stirpes", then to the estate.  

 

[Calavera]

Or the document may say: no spouse and no beneficiary form - no benefits

[truphao]

As Effen correctly noted, the doc says "the benefit will be paid "per stirpes", then to the estate".  Are there any specific forms need to be done to accommodate the payment to the estate? 

[Effen]

I don't believe so because it is not an election.  There are no choices or options.  I have worked with attorneys who suggest the plan just pays it directly to the executor, but I would confirm with the at attorney first.  

[Bill Presson]

So the "per stirpes" won't apply here? Shame.

[truphao]

apologize for not being clear - there is a pecking order in the Plan Doc:

If a Participant dies without having a Beneficiary designation then in force, or if all of the Beneficiaries designated by a Participant predecease him, his Beneficiary shall be his surviving spouse, or if none, his surviving children, equally, or if none, such other heirs, or the executor or administrator of his estate, as the Plan Administrator shall select.

[Bill Presson]

Understood that whole list. Just assumed from the prior response, there were no heirs at all. Thanks.

[truphao]

so, does anyone have some thoughts what "custom" forms might be necessary if money goes to estate?

[ESOP Guy]

If it is determined the estate is going to be paid things can get messy fast.  For example the estate might have to get its own EIN.  After all the estate is being paid and that is the entity that could get the 1099-R.

The beneficiaries of the estate might want to talk to a lawyer.  I have been told, and you are about to hear 100% of what I know so I am happy to be told I am wrong, in some states if the estate is small enough you can avoid a lot or all of probate hearings and just pay out the beneficiaries.   A lot of this is on them.    

[rocknrolls2]

Wait a minute, here! Is the spouse still alive? If not, are the children? If not, did they have any children who remain alive? You need to have no answers to all of the preceding questions before you even consider whether the benefit is payable to the participant's estate. The points raised by ESOP Guy are all problems for the decedent's estate and the surviving heirs. If it is payable to an estate, have the executor/administrator certify the EIN for the estate before you pay anything. Also ask to see letters testamentary (if the decedent died with a will) or letters of administration if the decedent did not have a will in force at the time of death. For the last sentence, short forms are ok for the plan to accept in lieu of full letters testamentary/administration.  If the estate is too small, there is an affidavit that is filed with the probate court -- have the personal representative provide you with a certified copy of the de minimis estate order. When it is time to issue the 1099-R, you would issue it to the estate's EIN (or if the estate is too small to the persons's SSN name in the order in lieu of administration). Who gets it, in what proportions and all other questions are not issues for the plan to solve -- they are the problems to be faced by the executor/administrator. I know that determining who gets per stirpes can be an issue since the plan would not know who is eligible to inherit. In that case, have the executor/administrator provide that to you. You might also want to get a release that you have a right to rely upon what they are telling you and that you have no liability for making payments pursuant to their direction. 

[truphao]

Thank you rocknrolls2.  

the saying "you do not know what you do not know" keeps spinning in my head today.

[david rigby]

7 hours ago, truphao said:

If a Participant dies without having a Beneficiary designation then in force, or if all of the Beneficiaries designated by a Participant predecease him, his Beneficiary shall be his surviving spouse, or if none, his surviving children, equally, or if none, such other heirs, or the executor or administrator of his estate, as the Plan Administrator shall select.

You will need to understand exactly what is meant, or intended, by the "such other heirs" phrase.  While (probably) rare, it could be open-ended.

[Bird]

17 hours ago, rocknrolls2 said:

Wait a minute, here! Is the spouse still alive? If not, are the children? If not, did they have any children who remain alive? You need to have no answers to all of the preceding questions before you even consider whether the benefit is payable to the participant's estate.

Exactly! A journey of one thousand miles starts with a single step...