We have an IRA whose owner is deceased. There are 4 beneficiaries listed - 3 children and 1 grandchild. We are being told that the grandchild is "gone in the wind", they don't know where he is and he is into drugs etc. The 3 children want to come in and get their share of the funds. What are our options for the grandchilds' portion of the IRA? Do we have to leave the IRA open with his portion? What if he never comes in?

You don't have the right to restrict access to the three, just because the one cannot be located. Bring them in one at a time to set up a "pay out" account and then follow their individual instructions regarding what they want to do with the funds.

You have no obligation to hunt down the absent grandchild. If he never comes in the funds will escheat to the state in the prescribed time period.

However, generally a family member will step up to the plate and ask to be pointed as a financial guardian or conservator (the terminology varies from state to state) and receive a court order allowing him or her to make the necessary decisions.

Thank you Ken!

On a somewhat related note...
Suppose you had an IRA where the owner had died and the beneficiary (a minor) had been receiving distributions. If the beneficiary moves and leaves no forwarding address and the distributions are returned unable to forward, what should be the appropriate procedure? It would seem inappropriate to continue to make distributions that are not going to be received. However, there would be no directions as to how to proceed with the account. At some point, the account would escheat if distributions were continued.

Any advice or direction would be appreciated.

If the beneficiary was a minor - how are you not making the distribution to a custodian or a trust?

That's a great question, rlcarey. I am unsure of how this was originally established, but we have been made aware of these checks and now are unsure of what to do with them.

You are required to complete the RMDs. If they go un-cashed, then they will eventually be escheated to the State. If what you say is in fact true, somebody may be wanting to take a closer look at this situation - preferably legal counsel.

Thanks!

On the other hand, if you've been paying out to this beneficiary, he or she would likely miss that income stream at some point and may even recall whence it came, and contact the bank to reestablish the connection.

I thing the point here is that you have to continue issuing the RMDs, but I second Randy's suggestion that legal counsel may need to be consulted concerning the bank's having made payments to a minor.