Withholding IRA Disbursement To Beneficiaries

Question: We have a single name checking account and an IRA with the mother of a son and daughter. The mother has died, and the son and daughter came in and tried to get money out of the checking account. They claim to be co-executors of the mother's estate, although we have seen no letters of administration or short certificate appointing them as such. They are co-beneficiaries under the IRA. We discovered they had gotten their mother's ATM card and have all but cleaned out the checking account. Can we hold on the IRA payout until we get the letters of administration?

Answer: Nope - Can't do it. It is not legally permissible to execute against, or attach, an IRA. They are exempt from execution and attachment under federal law, and generally under state law. That means no right of offset. Under these circumstances, the bank cannot block the IRA payout. It goes to the beneficiaries. It sounds like the son and daughter didn't bother to go to the register of wills to get the letters of administration, but rather just took a "short-cut" to get the funds.

If there is any property to be sold, they will have to eventually get the forms, so you may at least be able to get rid of the balance you're holding. Their mother must have had a PIN known to them in order to use the card, and from our conversation, you also have photo records of them making the withdrawals at your ATMs. I'd hold on to those tapes for a while.

Copyright © 2003 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 13, No. 4, 6/24