Estate taxes on IRAs
If I have an IRA with my wife as Primary and my 2 children listed 50% contingent beneficiaries, and if both my wife and myself were to die, would the IRA value be included in our Estate from a tax standpoint. I guess I am asking where the funds in that IRA would pass directly to our children without being included in the value of the estate? I know it would be stretch IRA and our children would see the funds as inherited IRA and thus could take distributions based on the their own life expectancy.
Permalink Submitted by Alan Spross on Fri, 2010-05-21 02:20
If you were to pass first, the IRA would go to your wife and would not be included in your net estate under the unlimited marital deduction. This assumes the estate tax will return by that time in the general format that existed prior to 2010. When your wife passed, the IRA assets would be included in her estate and there would be no marital deduction.
If your wife passed first, your IRA would go to the contingent beneficiaries after your death. The value would be included in your gross estate and subject to possible estate tax per the above.