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How does duty to inform come into play with gross administrative errors?

Ocala, FL |

The successor trustee (ST) of a decedent's living trust (LT) liquidated IRA accounts and deposited funds into a checking account; my understanding is that this will disqualify the distribution as an inherited IRA rollover. We have been making inquiries of the ST on various matters and she has suddenly gone silent over the last 3 weeks. If she has realized this is indeed an error, what is her duty to inform beneficiaries of this?

BTW, we are seeking a litigation attorney at this time, but geographic distance (CT/CA) is hindering our efforts. We are unsure of what kind of communication, if any, we should be having with ST in the absence of legal counsel.

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Attorney answers 2


The terms of the trust control what information and when it needs to be provided. If the trustee is still under court supervision, then the judge is the appropriate person to approach about what has gone on. What i dont understand is if the IRA is a rollover, who is it rolling over to? Only a spouse can get those funds as an IRA retirement fund, all other recipients get that as a distribution and it loses its retirement status.

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James P. Frederick

James P. Frederick


There are special provisions for a "beneficiary IRA" under newer tax rules. These allow other beneficiaries besides the spouse to get favorable tax treatment, but only under certain circumstances. Asker badly needs an attorney on this, and RIGHT AWAY.


You BADLY need to involve a CPA and/or tax attorney on this, RIGHT AWAY. It *may* be possible to correct this mistake, if in fact it was a mistake. But time is very much of the essence.

James Frederick

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Mr. Stein: No disrespect intended, but I ask you to learn a little more about inherited/beneficiary IRAs. You are incorrect in stating "Only a spouse can get those funds as an IRA retirement fund, all other recipients get that as a distribution and it loses its retirement status."