401(k) in the US

I’m dealing with an estate of a deceased who died domiciled in the UK but had for a time before his death worked and lived in the US. He has a 401k with Discover. They aren’t being very helpful (to say the least) and are now saying that we need to open a Small Estates Procedure in the US so that they can process this.

Is this correct ?

Rachel Roche
Roche Legal

Do you want the right answer, or the answer the party whose cooperation you need wants to hear? If you still want the right answer‎, you need first to identify which state’s laws apply.

Ian Watson
Three Stone

I understand where you’re coming from but my starting point for this question is that a 401(k) is a retirement account and, as I understand it, does not therefore form part of the estate. I wonder if members have encountered this before and, if so, how they dealt with it. There are no other US assets.

The State in which the bank is situated is North Carolina.

Rachel Roche
Roche Legal

My understanding is that 401(k) plans are not necessarily outside the estate. If the contributor named a beneficiary (like the nomination process in the UK) it passes to them without the need for a grant but, if not, it defaults back to the contributor’s estate, with the consequences of that varying from state to state.

Bruce Hogarth-Jones
Plantagenet Partners LLP

If there is a UK resident beneficiary named in the 401(k), who is not a US citizen an ITIN will be required. Because the IRS reject a third of all ITIN applications, it is often easiest to use an IRS certified acceptance agent to handle the application. The IRS take 10 - 11 weeks at the moment to issue an ITIN so you may want to start the ITIN application soon as well.

David Treitel
American Tax Returns Ltd

Welcome to dealing with the USA. You will need the patience of Job. It would be useful to see what Discover have told you as I suspect that the Small Estate Procedure is based the idea that Discover think your client died in the USA or is a US citizen. We ned to find out what they are actually asking you, as we work with a very good and reasonable charging lawyer who is based in Ohio.

He will certainly be bale to chase matters for you, but I suspect that a Grant in NC will be needed, and that the Small Estate Procedure is wrong. First though, we will need to find out what Discover are actually asking.

Do not hesitate to contact me if you would like further help.

Peter Double
Probate Resealing Services