One of the most challenging things anyone has to deal with is how to handle a deceased parent’s life and dig into everything they owned, including their bank and financial accounts. It’s already challenging enough having to grieve and mourn the loss of a loved one, never mind navigate the banking system.
This is precisely the case one Redditor is going through with a post in r/personalfinance. Upon the death of his father in 2006, many (many) years ago, this Redditor has been trying to get into the dad’s 401(k) account and has been unable to do so with his mom suffering similar difficulty.
Having spent almost two decades trying to navigate this situation, you can understand the Redditor’s frustration and desire to potentially give up trying to get access after nearly 20 years.
The Full Details
From the Redditor directly, we know that upon the death of the father in 2006, the Redditor’s mother, who was the dad’s ex-wife, tried to get the 401(k) cashed out but Vanguard, the holder of the account, wouldn’t give it to her.
Even with all of the necessary paperwork filed along with a death certificate, Vanguard told the mother to “kick rocks”. While we know Vanguard was far more graceful than this, it was undoubtedly a cold decision made by someone internally who sees dozens of these instances every year and must go by whatever process and laws Vanguard has set forth and has to follow.
However, things get frustrating when the Redditor and his family receive letters from Vanguard advising they must update the 401(k). Alternate methods to access the account, including attempting to get online access by the Redditor, have yielded no results. Instead, it appears the account is now locked out, and calls to Vanguard’s 800 number have not helped in any meaningful way.
Things get even more complicated because no one, including the Redditor, his sister, and his mother, really knows who the beneficiaries are. The Redditor believes it’s him and his sister, but he knows it’s possible his dad “did something stupid” and made one of his dad’s brothers a beneficiary.
So, what is the Redditor supposed to do? They also may have been putting in all this effort for almost 20 years only to discover that the account has little to no money. However, there is also a world where a giant windfall awaits.
Reminder to Plan Ahead
Almost two decades later, this is a really good time to remind everyone about the importance of planning ahead before jumping into any conversation about what the Redditor should do next.
At the heart of this matter is the question of beneficiaries and why naming them is downright necessary. The most important thing is that having a beneficiary ensures that all assets are correctly transferred to the right people, helps avoid probate court, and reduces costs that might otherwise be involved if no beneficiaries are named.
In the case of this Redditor’s father, who got divorced, updating beneficiary information would have been essential, especially considering this was a significant life event. In some way, it’s puzzling and a bit of a mystery as to why beneficiaries with this account were not already clearly designated when the account was set up.
Considering how easy it is to name a beneficiary and even split up any account into specific percentages going to different people, there is hope this is something the father would have done. In many instances, under the Employee Retirement Income Security Act, a spouse is the typical fall-back for default beneficiaries of any 401(k) unless otherwise specified by the account holder.
However, as this Redditor’s parents were divorced, this doesn’t apply and the law doesn’t exactly specify children as the next in line.
One of the most common misconceptions about 401(k) accounts is that any asset will go through probate without a beneficiary designated. This isn’t true. In this case, the account stands still, perhaps dormant, but hopefully earning interest. Still, the Redditor is definitely in a challenging situation.
Should You Give Up?
This is a tough one, and, ultimately, the Redditor did reach Vanguard and could not learn who the designated beneficiary was. Having exhausted what seems like the easiest and most cost-friendly options that could have resolved this issue, the Redditor and his family have a choice.
The first choice is to give up, which, after 20 years, is something most people would already have done, especially when they don’t know what’s even in the account. As the Redditor and his family can’t easily prove who would be a living heir to anything and everything the father owned, there doesn’t appear to be much left in the way of options.
The second choice, and the one that will most likely have the Redditor giving up, is to hire an estate attorney who is an expert in these matters. The real question here is whether or not this is worth the expense of an attorney. The father died living in a brother’s basement, so there is little reason to think there are millions of dollars at stake.
At the very least, I think it’s okay for this Redditor to consult an attorney so they know strictly what steps would be required. The lawyer would be unlikely to gauge exactly how long something like this will take, which would inform how much the lawyer could charge. In other words, there is a real risk that Redditor will spend more on a lawyer than what’s hidden in this mystery 401(k) account.
The bottom line is that while every option isn’t exhausted, all of the easy steps have been. The next step is expensive and time-consuming, and given that, I think the Redditor and his family should cut their losses and move on. It’s been 20 years already, so hopefully, they aren’t relying on any money in this 401(k) to do anything significant in their lives.
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