IRA Minor Child as Beneficiary-How to Endorse

Question:

We have an IRA for a recently deceased customer with a minor child (7 years) as beneficiary. We make the check payable to the child? Can the parent in turn endorse Jane Doe, Monor - Jill Doe legal guardian transact? How do we make sure Jill is the legal guardian? I'm thinking of an indemnification similar to parent transacting on redeeming bonds.

Answer:

The law of your state will answer this question. Absent a specific state law to the contrary, a parent does not have the right to settle claims or contract on behalf of a minor child. He or she would have to be appointed by the court as the child's financial guardian. Otherwise, the parent's signature on the withdrawal slip, the back of the check, etc. means nothing. You might as well sign it yourself.

An indemnification agreement means nothing unless the party signing it is able to pay and willing to pay when the time comes. It is inappropriate here.

First published on BankersOnline.com 1/21/13