T.J.

My husband's uncle died last September. He left his estate to be divided equally among his 11 nieces and nephews. He always told my father-in-law that he was the beneficiary on his 401K. When they were going through his papers they found something from 2003 that listed my father-in-law as the main beneficiary, who would receive 75%, and his brother-in-law as the second beneficiary, to receive 25%. Since that time the brother-in-law has also passed away. There was no falling out with his brother, so there would be no reason that he would have taken him off as the beneficiary. Also, the uncle was an odd duck when it came to taking care of business. We found checks from fifteen to twenty years ago that had never even been opened, let alone cashed. We found dozens of letters over the years where he would forget to pay his mortgage and end up in foreclosure, then he would hire an attorney to straighten it all out. He died with over $65,000 in his checking account and a stack of unpaid bills. In other words, it would be completely out of character for him to make a change like that to his 401k. And if he had made a change we would have found some documentation about it in his papers. We went through dozens and dozens of boxes full of papers. He had no filing system, and it was a complete mess, but he held on to every scrap of paper. His brother was his last living sibling, and they remained close until his unexpected death. Whenever he talked about his will he mentioned that 401k and that his brother was to receive the money.

My father-in-law was the executor of the estate until he became ill and was unable to continue in that capacity, and then his niece took over. During the past year they attempted to find out about the 401K, but were unsuccessful. After a year of not being able to find out a single thing about the account, all of the sudden, a few weeks ago my husband received a letter from the executor stating that the 401K had no beneficiary and that it would be split between the heirs. The very next day we received a check for over $40,000. Then, a few days later, out of the blue, the company that handled the 401K contacted my father-in-law and told him they believed he was the sole beneficiary, and that they had been trying to contact him, but did not have his current address. He did not tell them at that time (and apparently they didn't know) that the check had already been sent. He had to go out and get ahold of the death certificate and some other documentation and fax it to the company. They are trying to track down the information now. Apparently the 401k has been through several different managing companies over the years and they were fairly lax in keeping all of the information together each time it changed hands. In the meantime several of the heirs have already cashed their checks and spent part, or all of the amount.
My husband and I were trying to be conservative with our share and were planning the best way to spend it, so we have not cashed the check.

What I want to know is if he is indeed the beneficiary what will he have to do to get the money. We are talking about over $430,000 which is a substantial amount. If someone from the 401K company made a mistake will my father-in-law have to wait until they recoup the money from the heirs, or will they have to pay him and then go after the heirs? What kind of time frame do they have in which to pay him? What about the people that already spent the money? They had no idea that he was the real beneficiary, and cashed those checks in good faith, believing they were the rightful recipients. What will happen if they don't have the money to pay back? Should we deposit the check, without spending any of it, or wait and see what happens? My father-in-law is not young and his health has been poor recently. I don't know if he is up to a long, drawn out legal battle. My husband spoke to him tonight and he sounded almost resigned to the fact that the money was already gone and that there was nothing he could do about it. I am simply amazed that someone could have sent that check out to the wrong person. My father-in-law is not a wealthy man, and this is a life-changing amount of money to receive at one time. If it truly belongs to him I would like to see that he gets every penny of it, even if it means we have to forfeit our $40,000.

Sorry this is so long. Any advice will be appreciated

T.J.