I just had a Club ask me if we had a Beneficiary
form? In my two Clubs we do not, yet we had a Partner die in both Clubs.
In both cases we gave the Partners funds to the surveying spouse. What would
have happened if they were not married?
My wife lost her sister in February and she was
appointed her Executrices for her will. I have been exposed to some of
the legal issues of handling ones estate. Is there anything like a
Transfer On Death (TOD) account in a Club. I would appreciate your feedback.
Larry Reno
President
Georgia Chapter of BetterInvesting
Good judgement comes from experience. Experience comes from bad judgement--Mark Twain.
Jeff Rauch on
We had a death in our club this year. The withdrawal check was made out to the deceased, and cleared ok, though I think it should have been made out to the "estate of the deceased".
From the club's perspective I don't think a TOD designation has any impact. From the estates perspective a TOD designation would avoid the need for those funds to have to go thru probate, so would be advantageous to the aires.
Seems like it would be a good idea for clubs to have a TOD form. Any guidance from Bivio?
Jeff Rauch, Treasurer
SCS Investment Club
Columbus, Indiana
Sent from my iPhone
On Sep 30, 2020, at 12:36 AM, Larry Reno via bivio.com <user*17642900001@bivio.com> wrote:
I just had a Club ask me if we had a Beneficiary
form? In my two Clubs we do not, yet we had a Partner die in both Clubs.
In both cases we gave the Partners funds to the surveying spouse. What would
have happened if they were not married?
My wife lost her sister in February and she was
appointed her Executrices for her will. I have been exposed to some of
the legal issues of handling ones estate. Is there anything like a
Transfer On Death (TOD) account in a Club. I would appreciate your feedback.
Larry Reno
President
Georgia Chapter of BetterInvesting
Good judgement comes from experience. Experience comes from bad judgement--Mark Twain.
charlahurt on
Our club had a member die and I made the check out to "the estate of ..." as was recommended by BI. The family told me they could not deposit the check because their bank had no account in the name of "the estate of..." so we had to shred that check and make another to the deceased's husband who was not a member of our club. This is in Oklahoma, I don't know what happens in other states.
Charla Hurt
From: club_cafe@bivio.com <club_cafe@bivio.com> On Behalf Of Jeff Rauch via bivio.com Sent: Wednesday, September 30, 2020 12:15 AM To: club_cafe@bivio.com Subject: Re: [club_cafe] Does Your Club Have/Use a Beneficiary Form?
We had a death in our club this year. The withdrawal check was made out to the deceased, and cleared ok, though I think it should have been made out to the "estate of the deceased".
From the club's perspective I don't think a TOD designation has any impact. From the estates perspective a TOD designation would avoid the need for those funds to have to go thru probate, so would be advantageous to the aires.
Seems like it would be a good idea for clubs to have a TOD form. Any guidance from Bivio?
I just had a Club ask me if we had a Beneficiary form? In my two Clubs we do not, yet we had a Partner die in both Clubs. In both cases we gave the Partners funds to the surveying spouse. What would have happened if they were not married?
My wife lost her sister in February and she was appointed her Executrices for her will. I have been exposed to some of the legal issues of handling ones estate. Is there anything like a Transfer On Death (TOD) account in a Club. I would appreciate your feedback.
Larry Reno
President
Georgia Chapter of BetterInvesting
Good judgement comes from experience. Experience comes from bad judgement--Mark Twain.
Laurie Frederiksen on
You should not try and set up some sort of beneficiary form for club members accounts. Here is more information:
You should also be extremely careful in making payouts to anoyone other than "To the estate of ....". You don't know the ins and outs of any issues involved with the person's estate settlement. If you make a payout to someone that should not have received the funds, the club could be brought into the middle of legal battles that are or might end up going on between the heirs.
It is up to the executor of the estate to distribute the assets of the estate. Not your club.
Laurie Frederiksen Invest with your friends! www.bivio.com
Our club had a member die and I made the check out to "the estate of ..." as was recommended by BI. The family told me they could not deposit the check because their bank had no account in the name of "the estate of..." so we had to shred that check and make another to the deceased's husband who was not a member of our club. This is in Oklahoma, I don't know what happens in other states.
We had a death in our club this year. The withdrawal check was made out to the deceased, and cleared ok, though I think it should have been made out to the "estate of the deceased".
From the club's perspective I don't think a TOD designation has any impact. From the estates perspective a TOD designation would avoid the need for those funds to have to go thru probate, so would be advantageous to the aires.
Seems like it would be a good idea for clubs to have a TOD form. Any guidance from Bivio?
I just had a Club ask me if we had a Beneficiary form? In my two Clubs we do not, yet we had a Partner die in both Clubs. In both cases we gave the Partners funds to the surveying spouse. What would have happened if they were not married?
My wife lost her sister in February and she was appointed her Executrices for her will. I have been exposed to some of the legal issues of handling ones estate. Is there anything like a Transfer On Death (TOD) account in a Club. I would appreciate your feedback.
Larry Reno
President
Georgia Chapter of BetterInvesting
Good judgement comes from experience. Experience comes from bad judgement--Mark Twain.
ira smilovitz on
I'm not an attorney and I am not giving legal advice in what follows. Rather this is what I have learned from two decades working with investment clubs and over four decades as a tax professional. Beneficiary forms should NEVER be used without getting legal advice from an attorney in the relevant jurisdiction.
The main problem is that a partnership interest is not the same as the ownership of a bank or investment account.. The beneficiary designation may have absolutely no authority under the state law of the club or the decedent's residency.
The second problem is that, if a beneficiary designation is valid in your jurisdiction, as a legal document, it needs to meet whatever requirements (language, signature, etc.) will make it binding.
The third problem is that the club needs to know if the beneficiary designation will have legal precedence should there be a conflict between the designation and any other legal document that addresses the disposition of the assets of the decedent (trust documents, will, etc.). If the club gets it wrong, the club, and any of the members, both separately and collectively, will be responsible for paying the rightful beneficiary. To be clear, as a general partnership, any single member of the club could be forced to make good the entire claim of the rightful beneficiary. It would be up to that member (or the club) to pursue recovery from the party that wrongfully received the payout.
Note that this is just as much a problem when a member dies and leaves a surviving spouse. The club has no way of knowing definitively that the surviving spouse is the legal beneficiary of the assets of the decedent, nor that the decedent didn't leave sufficient liabilities to consume most or all of the assets of the Estate unless the club is presented with a legally valid claim from the legally authorized representative of the decedent's affairs. Here are two examples of common situations where the surviving spouse would not be the appropriate recipient of the decedent's interest in the club:
Husband and wife have split their assets in order to provide asset protection as they get older and anticipate a future need for assisted living.
This is a second marriage for one (or both), and (some/all) assets are designated for the offspring of an earlier marriage
The most important thing to remember is that the club is an entity apart from each of its members. It can't, and should not, know the intricacies of each member's financial situation and plans. The purpose of the Partnership Agreement is to allow the partnership to achieve its purpose and goals - to be an investment club - while providing as much protection as possible to its members from the consequences of its actions. The investment club does not exist to facilitate the financial planning of an individual member.
I'll finish as I began. If you are considering a beneficiary designation, consult legal counsel before you do anything.
We had a death in our club this year. The withdrawal check was made out to the deceased, and cleared ok, though I think it should have been made out to the "estate of the deceased".
From the club's perspective I don't think a TOD designation has any impact. From the estates perspective a TOD designation would avoid the need for those funds to have to go thru probate, so would be advantageous to the aires.
Seems like it would be a good idea for clubs to have a TOD form. Any guidance from Bivio?
I just had a Club ask me if we had a Beneficiary
form? In my two Clubs we do not, yet we had a Partner die in both Clubs.
In both cases we gave the Partners funds to the surveying spouse. What would
have happened if they were not married?
My wife lost her sister in February and she was
appointed her Executrices for her will. I have been exposed to some of
the legal issues of handling ones estate. Is there anything like a
Transfer On Death (TOD) account in a Club. I would appreciate your feedback.
Larry Reno
President
Georgia Chapter of BetterInvesting
Good judgement comes from experience. Experience comes from bad judgement--Mark Twain.
ira smilovitz on
While making the check payable to the "Estate of [the decedent]" is preferable, making it payable to the decedent directly should be fine. In either case, the check can only be negotiated by the legal representative of the decedent's affairs. While a surviving spouse may be able to cash/deposit a check made out to the decedent, If the surviving spouse is successful in negotiating the check, but isn't the rightful beneficiary, s/he (the spouse) would be liable to make good the claim, not the club.
We had a death in our club this year. The withdrawal check was made out to the deceased, and cleared ok, though I think it should have been made out to the "estate of the deceased".
From the club's perspective I don't think a TOD designation has any impact. From the estates perspective a TOD designation would avoid the need for those funds to have to go thru probate, so would be advantageous to the aires.
Seems like it would be a good idea for clubs to have a TOD form. Any guidance from Bivio?
I just had a Club ask me if we had a Beneficiary
form? In my two Clubs we do not, yet we had a Partner die in both Clubs.
In both cases we gave the Partners funds to the surveying spouse. What would
have happened if they were not married?
My wife lost her sister in February and she was
appointed her Executrices for her will. I have been exposed to some of
the legal issues of handling ones estate. Is there anything like a
Transfer On Death (TOD) account in a Club. I would appreciate your feedback.
Larry Reno
President
Georgia Chapter of BetterInvesting
Good judgement comes from experience. Experience comes from bad judgement--Mark Twain.
Peter Dunkelberger on
My personal trust attorney suggested that it might be a good idea to have a beneficiary form for the partners in our partnership. Our club discussed it and decided we would not do that for the following reasons: 1) we would have to make certain it was periodically updated, 2) we would have to maintain the file, and 3) we might be liable if it were updated and we neglected to follow the instructions for whatever reason.
I would not make a check out to anyone other than the partner. As Ira wrote, a legal representative can always cash the check payable to a deceased partner and the club is not running the risk of making a check out to the wrong party. Neither the estate of or the spouse of the partner is a partner in your partnership or a member of your LLC. Be safe and make the check out to the partner. Your deceased partner will be receiving his K-1 at the end of the tax year in his or her name, so getting a check from the club made out to the deceased partner is not a problem.
While making the check payable to the "Estate of [the decedent]" is preferable, making it payable to the decedent directly should be fine. In either case, the check can only be negotiated by the legal representative of the decedent's affairs. While a surviving spouse may be able to cash/deposit a check made out to the decedent, If the surviving spouse is successful in negotiating the check, but isn't the rightful beneficiary, s/he (the spouse) would be liable to make good the claim, not the club.
We had a death in our club this year. The withdrawal check was made out to the deceased, and cleared ok, though I think it should have been made out to the "estate of the deceased".
From the club's perspective I don't think a TOD designation has any impact. From the estates perspective a TOD designation would avoid the need for those funds to have to go thru probate, so would be advantageous to the aires.
Seems like it would be a good idea for clubs to have a TOD form. Any guidance from Bivio?
I just had a Club ask me if we had a Beneficiary
form? In my two Clubs we do not, yet we had a Partner die in both Clubs.
In both cases we gave the Partners funds to the surveying spouse. What would
have happened if they were not married?
My wife lost her sister in February and she was
appointed her Executrices for her will. I have been exposed to some of
the legal issues of handling ones estate. Is there anything like a
Transfer On Death (TOD) account in a Club. I would appreciate your feedback.
Larry Reno
President
Georgia Chapter of BetterInvesting
Good judgement comes from experience. Experience comes from bad judgement--Mark Twain.
ira smilovitz on
Although I said that a check payable to the deceased "should" be acceptable, I still recommend making the check payable to "The Estate of [deceased]". In this country, anyone can sue anybody for anything. Making the check payable to the decedent instead of the Estate exposes the club to greater risk.
My personal trust attorney suggested that it might be a good idea to have a beneficiary form for the partners in our partnership. Our club discussed it and decided we would not do that for the following reasons: 1) we would have to make certain it was periodically updated, 2) we would have to maintain the file, and 3) we might be liable if it were updated and we neglected to follow the instructions for whatever reason.
I would not make a check out to anyone other than the partner. As Ira wrote, a legal representative can always cash the check payable to a deceased partner and the club is not running the risk of making a check out to the wrong party. Neither the estate of or the spouse of the partner is a partner in your partnership or a member of your LLC. Be safe and make the check out to the partner. Your deceased partner will be receiving his K-1 at the end of the tax year in his or her name, so getting a check from the club made out to the deceased partner is not a problem.
While making the check payable to the "Estate of [the decedent]" is preferable, making it payable to the decedent directly should be fine. In either case, the check can only be negotiated by the legal representative of the decedent's affairs. While a surviving spouse may be able to cash/deposit a check made out to the decedent, If the surviving spouse is successful in negotiating the check, but isn't the rightful beneficiary, s/he (the spouse) would be liable to make good the claim, not the club.
We had a death in our club this year. The withdrawal check was made out to the deceased, and cleared ok, though I think it should have been made out to the "estate of the deceased".
From the club's perspective I don't think a TOD designation has any impact. From the estates perspective a TOD designation would avoid the need for those funds to have to go thru probate, so would be advantageous to the aires.
Seems like it would be a good idea for clubs to have a TOD form. Any guidance from Bivio?
I just had a Club ask me if we had a Beneficiary
form? In my two Clubs we do not, yet we had a Partner die in both Clubs.
In both cases we gave the Partners funds to the surveying spouse. What would
have happened if they were not married?
My wife lost her sister in February and she was
appointed her Executrices for her will. I have been exposed to some of
the legal issues of handling ones estate. Is there anything like a
Transfer On Death (TOD) account in a Club. I would appreciate your feedback.
Larry Reno
President
Georgia Chapter of BetterInvesting
Good judgement comes from experience. Experience comes from bad judgement--Mark Twain.