Can an IRA Beneficiary Be Contested After It Has Been Cashed?
An Individual Retirement Account (IRA) has several living advantages that help a person to save funds for retirement. There is a also an advantage in estate planning by naming a beneficiary to receive the assets upon the death of the IRA owner. Because the funds go directly to the beneficiary, contesting the designation not only requires proving your case, but then reclaiming the assets.
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Determining Your Rights
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Most states require a surviving spouse to be the primary beneficiary on an IRA account unless the spouse signs a waiver. With a waiver, the IRA owner can leave assets to another beneficiary. If no waiver is signed, then the surviving spouse is entitled to the entire IRA death benefit. If the spousal waiver is not applicable, then guidelines define who the IRA owner can leave assets to. He can choose a person, a charity or his estate.
Fraudulent Changes to Designations
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It is possible that the beneficiary designation was changed by the IRA owner under duress, coercion or when no longer of sound mind. Financial predators can be very convincing to elderly people, convincing them that their children no longer care about them and that they need to make changes to their estate. These people will even walk the elderly person into the bank or brokerage firm to help them through the process of changing beneficiaries. These are not only reasons for contesting, but are grounds for criminal fraud charges.
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Timing a Contest
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Contesting the beneficiary designation is easiest done immediately. If the money is still at the IRA custodian, the custodian places a freeze on assets, waiting as a neutral party for the courts to determine the rightful beneficiary. It is possible to contest the beneficiary after benefits are distributed. Check your state'a statute of limitations on such claims. If you win the contest, you then need to reclaim the assets; depending on how much time has passed, the money or the person who took it may be long gone.
Going to Court
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To contest the beneficiary, first send notice to the IRA custodian. If done early enough, funds can be frozen or a stop payment might be feasible. Even if the money is gone, the IRA custodian is your first source of information to prove your case. Obtain a copy of IRA adoption agreements and any beneficiary designation or change forms. Go to the county courthouse and ask the clerk what petitions are required to open a contest on a beneficiary designation. Complete all forms and file them with the court clerk, including any proof you have regarding your claim. Doctor records stating dementia or witness accounts of someone urging the IRA owner to sign the changes are all part of your case. Subpoena those involved and attend the court hearing to assert your position.
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