Spouse Dies Intestate
Husband and father age 50 dies intestate. Beneficiary designation on his IRA account is his estate since he never got around to changing when married less than a yr ago. Residence is/was NY State . Wife is 35 with a newborn.
At first look it seems like a disaster since wife cannot do spousal roll over and stretch is lost since estate is beneficiary .. meaning 5 yr rule.
However I recall reading a piece authored by Bruce Steiner where he points out PLR’s where if clients WILL gave wife control of the assets and gave her the residuary estate the IRS allowed her the spousal rollover even though estate was beneficiary.
But in my example there is no will and control rests with probate court. On one hand I think the spousal roll over is a lost cause but on ther the hand I’m thinking that if NY intestate law gives everything to spouse anyway( which I dont have a clue on) then the IRS just may in a PLR allow th eroll over.
Any thoughts? Bruce if you happen to see this can you please post that piece you did?
Permalink Submitted by Bruce Steiner on Wed, 2009-01-07 01:06
The court has no discretion. The intestacy laws determine how the estate is divided between the spouse and the child. In New York, if there is a spouse and issue, the spouse gets the first $50,000 plus 50% of the balance, and the issue get 50% of the balance. The law on this is different in other states.
I think they should be able to get a favorable private letter ruling in this case.
Here is the link to my article: http://www.kkwc.com/docs/AR20050125164755.pdf
Permalink Submitted by charles lore on Wed, 2009-01-07 01:28
Bruce thanks for the response. It looks like the PLR related to intestacy on page 371 of your piece is similar to my scenario. In fact I feel somewhat optimistic that when the intestacy is verified by the custodian through her attorney, given NY law and given past PLR , they may allow the roll over w/o a ruling. If they do require it it will be worth the money for a 200k ira.