Don’t Let Them Boss You Around!

Financial Planning

Dealing with financial institutions is not always easy; nor are the institutions always in the right.  This is a big frustration in practicing estate planning and probate law.

Financial institutions often set policies or mandates for their customers that are not always consistent with the law or even the institution’s own prior agreement with the customer.  Let me give you an example:
Last year one of my long-time clients died.  He had an IRA of about $800,000 that named his grandchildren as beneficiaries.  Given their young ages (around 30), they had the potential of stretching out the account over their life expectancies, which would allow for tremendous tax-deferred growth.
However, the life insurance and annuity company that served as IRA custodian refused to cooperate. After first saying that while they could not accommodate “stretching” themselves, they would allow a rollover to a beneficiary IRA in another company, they then said the account had to be paid out in one single, taxable payment.  This position was contrary to the company’s IRA/Annuity agreement put in place when the IRA was established.
Luckily, after a sternly-worded letter pointed out that the company was in breach of its contract and that my client’s grandchildren intended to sue for the more than $100,000 in damages they would likely incur in extra taxes and loss of growth, the company quickly relented.
The moral of the story is that one should not always give up easily when in a dispute with a bank or insurance company.  Sometimes one can even score a victory with a minimum of time or attorneys fees.
Address: 1414 Raleigh Rd Ste 203, Chapel Hill NC 27517
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