Do I Need a Beneficiary's Consent to Close a TOD Account?
Full Question:
Answer:
The answer will depend on all the facts involved, such as whether the beneficiary also is an owner in the account or has a contract right to the proceeds in a separate agreement (such as a divorce decree) with one of the owners. For example, a trust document may specify notice to beneficiaries in certain circumstances. If your 403(b) plan is subject to ERISA, spousal consent may be required. In general, the account holder has a right to close accounts without notifying non-owner beneficiaries named on the account. For example, in a TOD account like an insurance policy or annuity may typically be closed by a sole owner without the named beneficiary's consent if the beneficiary was named solely out of love and affection.
Community or marital property state laws may require spousal consent for a nonspouse beneficiary designation. The laws of the state in which the financial organization is domiciled, the IRA owner resides, the trust is located, the spouse resides, or this transaction is consummated should be reviewed to determine if such a requirement exists. Spousal consent for the beneficiary designation may also be required by financial organization policy.
For further discussion, please see:
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