Transferring Bank sent an IRA Transfer check to us, Bank FBO Customer. While the check was in transit, the customer passed away. We do not have an IRA set up or waiting, customer had signed nothing. We returned the check to the sending bank because we have no where to deposit the funds. Operations asked me if we could accept the check and deposit it into an Estate IRA (customer had no beneficiaries). I said no, because the paying bank would need to establish the Estate IRA in order to transfer the funds for IRS reporting purposes - now I'm doubting myself.

Am I right? Or could we accept the check as is and transfer the IRA into the customer's estate???

I concur - you have no place to place the money - there is no IRA account established for the transfer and now that the IRA accountholder is deceased, there never will be.

Thanks, Randy