I represent an estate. The deceased owned had named her three children as equal beneficiaries of all of her IRAs. Shortly before her death, our decedent changed the beneficiary designation of a particularly large IRA to make one son the primary beneficiary and the remaining two children co-equal contingent beneficiaries. The children believe that the mother was not competent when she made the change, and the son has agreed to disclaim 2/3 of the IRA.

I was in the process of drafting the disclaimer when I discovered that the custodian had already made the 2012 RMD to the executor of the deceased’s estate, rather than to the beneficiary son. I know that the son can make a partial disclaimer of the IRA, specifically disclaiming the pecuniary amount of the year of death RMD plus interest attributable per Rev. Rul. 2005-36. However, since the 2012 RMD was mistakenly made to the estate, the son will receive one-third of the RMD as a one-third beneficiary of the estate. This is the same result that would have happened if he had disclaimed 2/3 of the IRA before the 2012 RMD was distributed (and if the custodian had correctly made the distribution to the resulting beneficiaries.)

Does anyone have an opinion as to whether it is necessary to have the custodian correct the mistaken distribution? Since the distribution was made before the beneficiary son disclaimed was he deemed to have received it? Should I attempt to have the executor return the RMD to the custodian and have it paid out to the son? Or, should I just have the son disclaim with no reference to the 2/3 of the 2012 RMD, since he won’t be receiving it anyway.