|
Financial Planning - Financial planning in general. (Moderated)
|
|
|
|
|
Posted by Peetie Wheatstraw on February 15, 2008, 5:15 am
This has to do with what *actually* takes place when someone
with Mutual Fund holdings has specified a small charity as beneficiary
for "Transfer On Death" and later dies.
"Transfer On Death" is widely billed as an effective method
of avoiding dreaded probate. And it is (or can be), but ...
Mr. X, with no wife, no children, wishes to bequest his mutual
fund holdings to a small charity with limited personnel and a
valid tax-exempt US fed tax ID. He somehow assumed that he
could submit a TOD beneficiary form with a letter of instruction
specifying the charity, it's tax-id, its bank, routing # and
account #, liquidation of assets, etc such that the mutual fund co.
could wire the proceeds after being presented a death certificate.
No such luck. After making many inquiries, Mr. X finds that the
Mutual Fund companies want the beneficiary to jump thru many, many
hoops.
An excerpt from Fidelity's TOD Designated Beneficiary Agreement/Form:
-----------------------------------------------------------------------
It is the responsibility of each beneficiary designated under the
Agreement to notify Fidelity of the death of the account holder and
to provide in a timely manner: (1) a completed copy of the applicable
Fidelity form; (2) a copy of the death certificate; (3) a tax waiver
if required by state law; and (4) such additional information or
documents as Fidelity may deem necessary or appropriate in its sole
discretion. In some instances, Fidelity may require a certification of
the identity of the beneficiaries from the personal representative of
the estate of the account holder, a beneficiary or representative of
a beneficiary, or any other person deemed appropriate by Fidelity.
Fidelity will have no responsibility for locating beneficiaries. Fidelity
reserves the right to require each beneficiary to open an account at
Fidelity in order to facilitate transfer of the account’s assets and to
execute an indemnification in the amount of the account’s assets.
-----------------------------------------------------------------------
Fidelity won't even contact the beneficiary: they have to contact Fid.
Schwab is not much better. Representatives of neither were the least
familiar with the "Uniform TOD Security Registration Act", apparently
adopted in all involved states. The beneficiary forms/agreements
mention only individuals and trusts: no mention of charities anywhere.
On the one hand, Mr. X understands that the MF co. must protect
itself legally. If they made an improper distribution, they could
be held liable.
On the other hand, all this induces Mr. X to have an in same dream in
which the MF co's require so much ridiculous red-tape stuff of the
beneficiaries that they forget about the bequest -and- the MF co.,
allowing the MF co. to eventually keep and use the bequested assets.
Q1: Is there any general way to circumvent unnecessary red-tape and get a
TOD distribution expedited?
Q2: If not, are there any Mutual Fund companies known to honestly
and regularly expedite TOD distributions?
Thanks,
Peetie
--------------------------------------
Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.
|
| Similar Threads | Posted | | Mutual Fund Holdings Comparison | December 17, 2006, 12:09 pm |
| Mutual Fund Ques | January 22, 2007, 7:15 pm |
| ETF vs Mutual Fund in Roth IRA | July 14, 2007, 3:00 pm |
| What is the best mutual fund to invest in? | July 24, 2007, 7:19 pm |
| Mutual Fund Price | December 27, 2007, 8:01 am |
| New Mutual Fund vendor? | March 2, 2008, 7:23 am |
| what if the mutual fund company goes belly up | April 25, 2007, 7:27 pm |
| possible to invest in an energy mutual fund with less than 25k | July 10, 2007, 10:49 am |
| mutual fund transaction fees | October 12, 2007, 4:27 pm |
| Re: Why does Canada have high mutual fund fees? | December 9, 2006, 12:46 pm |
|
|
|
Yahoo! 
Google 
Windows Live 
del.icio.us 
digg 
Netscape 
XML Sitemap