My wife's grandmother is recently deceased, most of her liquid assets were with a guy at Edward Jones. My MIL is the executor and reached out to him a few weeks ago; all 5 kids were listed as beneficiaries/PODs and he said it wouldn't be an issue to liquidate and cut checks.

Fast forward to today, he stated that the kids need to have interviews and that they're going to roll the money into individual EJ accounts first.

Question for the FAs: is there any legit reason the funds would need to flow to individual accounts? If the assets were in an IRA, is continued tax deferment offered to the beneficiaries if they are rolled to IRAs?

I'm 95% sure this is just a BS sales tactic to keep the assets, but I want to be positive before I say that to my MIL.

Edit: I just read about inherited IRAs, and I suspect this is what he's trying to get them to do. That said, my MIL made it sound like the majority of the assets were not in an IRA and were in a taxable brokerage.. so it sounds like he's slow-rolling the liquidation of the taxable account to sell them on setting up inherited IRAs with him.

setting aside the issue of inherited IRAs and structuring withdrawals, what's the hypothetical impediment to liquidating the existing taxable account and distributing directly if it's TOD and beneficiaries are named? Why take the intermediary step of setting up an Estate account?

Thanks.

Well just to be clear if there was no tod then the estate account would be created. If tod is set up then it avoids probate.

I don't understand what the issue is?

Basically an account needs to be established so that if you liquidate the investments and have a check mailed there could be tax benefits or capital gains that you will need a 1099 for later.

There is no cost to do this.

What's the issue?

Each Broker-Dealer will have their own policies. Ours requires accounts to be set up in the names of the beneficiaries and the assets moved before they can be liquidated and cashed out.

Nactown is correct. I don't work at ej, but they have to be moved into individual accounts first. To open those individual accounts: you need each persons info, net worth, investment knowledge, etc. real pain, but thank your government for that.

It really just depends on your own back office processes. It's not at all impossible to split assets into a beneficiary's account with another custodian. It may be a PITA for the person processing it, but who cares?

Is there a reason why it matters? If there's no cost/fees and there's easier management of taxes by doing it this way then what's the problem?

Also, I do take issue with this comment about not finding highly specialized advice at EJ. I understand not all are this way. Tell me what firm you can go to where every single person you talk to is highly specialized? And what's the definition of highly specialized?

I'm sure there are plenty of highly educated advisors such as yourself over at EJ. However, just like everywhere else, there are lazy, garbage advisors there.

However, none of this changes the process. It's not like one EJ advisor processes estate settlements different than back office rules dictate.

And it matters because when a client is trying to make a break from your platform, the last thing they want to do is open a new account with you and create an unnecessary delay in the process.

To be fair, your first comment about the EJ advisor was pointless and shallow. According to nac, he was following procedures and protocols and just doing what he's supposed to do.

And in my experience it's cleaner to line it out the way EJ does it. When money is going from/to an account from an account that's already set up in the persons name, and classified/titled correctly its typically easier for both entities to get it documented and filed correctly. It might take an extra meeting at the original firm to get the account paperwork set up for the beneficiary, but if you think that's a big deal is the passdown of assets you haven't had to deal with someone's death. That's pretty easy compared to a lot of the stuff people have to deal with in going through that process.

If you're talking about IRA money, an inherited IRA is advisable so as to spread the required distributions. The main reason I can see EJ requiring interviews and beneficiary accounts being opened is to protect themselves from a beneficiary claiming they were negligent for not explaining the options for distributions. The cynical side of me would ask if this will result in closeout fees being levied on 5 accounts vs 1 if everyone is planning to take the money immediately.

If the account is taxable, I can't understand why they would require the new accounts. If the account didn't have Transfer on Death beneficiaries, the executor will have to move the assets in an estate account and distribute to the heirs from there. If that is the case, I can only imagine a place like Wells Fargo would open new accounts for the heirs

This is fairly normal. They'll open the account and then journal the assets from the home office straight to the beneficiaries account.

The whole "interview" thing is to retain the assets, but you don't have to do that. I'd just be upfront and tell them that you want to move it to your guy so just open the account and then acat (transfer) it out.

I'm not with EJ, but our B/D requires new accounts for the beneficiaries. It's a pain in the butt, especially when they live all over the country because you have to chase down signatures.

Believe me, there are many cases where I'd much rather just cut the check and be done with it.

If he tries to sell them on keeping the money with him, just tell him no and move forward. He's not going to hold their assets, and he's probably not going to want a client who doesn't want his service anyway.

Welcome to life with new regulations for fiduciary standards for retirement accounts.

billydean05 said:

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Welcome to life with new regulations for fiduciary standards for retirement accounts.

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This has nothing to do with DOL implementation. This is either EJ's policy or an advisor not knowing what they are doing (or legitimately being deligent).

If it is indeed a retirement account it could have something to do with DOL rules.

There's so much more now that goes into setting up a retirement account even if it is going to transfer out.

Woody2006 said:

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there are lazy, garbage advisors

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Someone rang? (not EJ though)