Client P (85) died in Oct 2022. Spouse S (82) will be over the limit for state inheritance tax by about $1.65 million. Client P has IRA worth about $1.7 million with spouse S as beneficiary. There is a family trust set up and the Estate Attorney is recommending the wife disclaim the IRA and have the look through trust as beneficiary. I reviewed the trust and it appears to qualify as a conduit trust under Reg 1.401 (a)(9) – 5 as stated in the trust so the RMD’s should flow directly to the two beneficiaries. The wife’s only income is about $25K in social security and $45K in quailed dividends. Last years RMD was $140K. The attorney recommends this because the beneficiaries have super low income (<20K), so it would be more efficient for them to take the RMDs each year and then distribute the whole amount at the end of 10 years. My thought is to roll the IRA to a spousal IRA making the kids the beneficiaries or even her trust as beneficiary as it qualifies the same. P who died has an $800K house in his name only that just stepped up in basis plus she has a living trust of 1.6 mill with ample amount of low basis stock she can gift to the beneficiaries with almost no income. She can disclaim the house and give low basis stock. Caveat, the spouse S is (82), has MS and may be moving into assisted living. I would put her life expectancy at around 3 years. Her son (a beneficiary) currently lives with her and takes care of her somewhat plus home care. One concern is that if he gets the money directly he will spend it on drugs, that is why there are trusts. Also, the trust states that if he is on drugs, he will get no distributions. In that case, I assume the total RMD would have to go to the daughter. Sorry, complex case. My question is, am I on the right track in my aim to extend the deferral as long as possible? Will the attorney's plan create a larger tax bomb in the end or does it make sense?

Thanks,
Elizabeth