Death Benefit - Missouri

[justanotheradmin]

Anyone have any resources / contact information that can be sent to an attorney in Missouri who is not understanding the retirement beneficiary and federal rules for death benefits?

Or alternatively - tell me my understanding is wrong and I'll tell them and the sponsor to listen to the attorney?

 

Fact Pattern:

Death distributions needed from standard 401(k) and DB (PBGC covered) small employer retirement plans.  Everyone is in Missouri. 

No named beneficiaries, so the default plan document beneficiaries apply. In this case the default beneficiary in the plan document is the estate. Period. 

Decedent did not have a will, based on court filings total value of assets likely is less than $40,000 (including the retirement plans) Estate/Probate was not opened within one year, and in lieu of doing the Small Estate Probate (Which is still allowed after one year), the heirs did file and receive a Decree/Determination of Heirship. Which does happen to have an estate number on it, so the court can track it. 

• Attorney for the heirs wants the plans to pay directly to the heirs. 

 

• The plans are insisting on a TIN so the death benefits can be paid to an estate. Which I agree with. 

The confluence of federal laws for the plan, the fact that  there IS a beneficiary, so the determination of heirs doesn't really matter for the plans, etc, are confounding for the heirs' attorney.  

Other than just telling the plans to hold firm, any other ideas? information they can send them? Any Missouri estate attorneys want to chime in or want me to send their contact info to the heirs' attorney? 

[Peter Gulia]

If the plan’s governing documents specify no more than that the default beneficiary is “the Participant’s estate”, the meaning or effect of that phrase might be ambiguous, and there might be some need for the plan’s administrator to use its discretion to interpret the plan.

Some administrators insist on paying only the estate’s court-recognized personal representative.

Others use some tolerances for less control, taking some risks.

Here’s a BenefitsLink discussion about whether to take some risks by relying on a small-estate affidavit.

 

The plan’s administrator, with its lawyer’s advice, might consider whether a court’s decree or other determination of heirship might involve some similarities.

Among the ways a plan’s administrator might manage communications with the estate’s heirs’ attorney could be to follow ERISA § 503 and the plan’s claims procedure.

IF a plan’s administrator decides any tolerance to pay someone other than the estate’s personal representative, that would not excuse a need for each distributee’s certification of one’s Social Security Number, Individual Taxpayer Identification Number, or other TIN.

This is not advice to anyone.

[justanotheradmin]

Thank you Peter, that thread was very insightful. 

 

[david rigby]

Non-lawyer opinion follows:  Since the original question said nothing about a spouse, it appears we are to assume "not married" and "no QDRO".  Just trying to be thorough.

Quote

Attorney for the heirs wants the plans to pay directly to the heirs.

This might be because the deceased has debts greater than assets, although that is (probably) not a concern of the Plan.

I've encountered a few cases where the death benefit went to an estate; it seems likely (to me) that the Plan Administrator's best position is to follow the plan definitions precisely.  But it should open the discussion as to whether the plan can be amended for more flexibility, going forward.  For example, many plans use a definition that includes (after spouse), the deceased's lineal descendants and ascendants, followed by "the estate"; is there a problem of amending the definition to include siblings?

[ESOP Guy]

I have a large client in MO.  When this happens their ERISA attorney was comfortable to paying the heirs of the estate and by pass the estate.  I am not a lawyer but it is my understanding is the small estate rules are designed to by pass having to file an estate return and other paperwork that can eat up all the value of a small estate. 

I would have the plan inquire with their lawyer to decide if the plan pay the people.