No. of Recommendations: 1
Dear Fidelity: 24 Sept 2000

My wife and I have had an IRA with Fidelity since the early 1980's.

Today's edition (24 Sep 00) of The Dallas Morning News (page 6H) includes an article by Kathy Kristof highlighting potential legal problems one's spouse can encounter related to managing their Fidelity IRA. The problem arises if IRA owner (usually the husband) becomes incapacitated (but not dead) and his wife may not be able to access and manage their IRA investment portfolio without resort to extensive (and expensive) legal machinations. In effect, their IRA account would become frozen in the world of 'legal limbo' with severely restricted access and high legal fees. According to the article, several of Fidelity's competitors allow IRA account owners to provide the institution with a legally binding durable power of attorney so that the account owner's spouse can manage their IRA account(s) should the account owner become incapacitated.

The article describes a couple with circumstances similar to my wife and I. In both cases, we are partners in all things financial (even though account number is in my name) in a community property state (Texas) and each of us has a durable power of attorney for the other. However, according to this article, Fidelity will not accept my spouse's power of attorney to manage our IRA portfolio should I become incapacitated without extensive legal machinations. If this is true, it is time for us to find another financial institution for our investments.

I have been assured (verbally) by Fidelity customer service that my account is set up so that my wife can have access to our account should I die. However, I neglected to ask specifically what would happen to her access should I become incapacitated by a long-term illness such as Alzheimer's.

What do I expect from Fidelity? We have Rollover IRA, Traditional IRA, and Joint Taxable brokerage accounts with Fidelity. I want to know (in writing) how Fidelity will allow my wife unrestricted access to manage each of our accounts. If we need to file a spousal power of attorney for each account, please provide me with the forms.

I look forward to hearing from you.


NOTE: I am an active contributor to online investment bulletin boards maintained by The Motley Fool and Yahoo. I have posted this letter on both boards to ensure that this potential legal limbo is broadcast to as many investors, Fidelity and otherwise, as possible. This is an issue which is much too important for individual investors to allow to continue.

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