Legal Question in Wills and Trusts in California

Named beneficiary of 401K account

I was named beneficiary of my late fathers 401K account. The proceeds of the account were distributed to me in January of 07. Today I received a letter from the financial institution that they want me to return the funds immediately because �At the time of the disbursement you had been identified as a beneficiary of the account. Unfortunately, you were not a designated beneficiary of the account in the plan and therefore the distribution was made to you in error�

What does this mean? Am I legally bound to return the funds?


Asked on 2/26/07, 4:43 pm

1 Answer from Attorneys
Elizabeth Powell ELizabeth Powell PS Inc

Re: Named beneficiary of 401K account

Time to lawyer up, I think. Somebody jumped the gun, which is not fatal to your gift but just needs a few more hoops.

Did your father do a will or a trust in which you were named a beneficiary? If so, sounds as though the distribution should go through the estate rather than directly to you from the plan administrator.

Is there an attorney handling the estate? You can certainly contact that person with the letter from the financial institution and ask the attorney to explain why the plan administrator is now demanding return of the funds.

There's also the "holder in due course" doctrine which would function as a defense for you in this case.

If I knew what county you were in I could give you a referral.

Hope this helps - Powell

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Answered on 2/26/07, 7:56 pm


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