ESTATE AS BENE
Husband and wife age 80 have each other as primary beneficiaries. They both have estate as contingent. They die together in car crash. The will is very clear that children A,B,and C are to split all assets equally. Do current rules allow children to move their share of ira inheritance to a beneficiary IRA and thus enjoy the stretch? I realize it is better to have kids as contingents but with set up as described is the stretch possible?
Permalink Submitted by Alan - IRA critic on Thu, 2012-12-27 01:41
The executor can assign the IRAs to the will beneficiaries, who can then create separate inherited IRA accounts for independent investment and control. However, the stretch will be considerably limited to that of the remaining life expectancy of the deceased parent. The estate should be sure to complete any remaining 2012 RMD of the decedent’s or if the estate can be terminated quickly, the beneficiaries can take care of it collectively. For 2013 the Table I divisor will be 9.7 (age 81) and reduce by 1.0 for each following year. Therefore, the inherited IRAs will be drained in around 10 years.
Permalink Submitted by chuck jackson on Thu, 2012-12-27 01:49
So it sounds like a given child beneficiary wanting to get his share into a bene ira to stretch based on his life expectancy , just as if he was a contigent is not possible? Is there not a window of time that would allow for this? Losing the full stretch seems too harch when the intent of the owner was made clear in his/ her will.
Permalink Submitted by mk foss on Thu, 2012-12-27 06:35
The tax law doesn’t give leeway to what someone should have done. In order for the children to use their own life expectancies they had to be either primary or contingent beneficiaries. At least the IRA can be split so that they can invest their share’sseparately and vary the timing – as long as RMDs are taken. It seems at least one beneficiary always wants distributions faster than others.
Permalink Submitted by Edward Czapor on Thu, 2012-12-27 20:30
Alan,Would not the Table I divisor in this situation be determined by the ages attained in year of death. Assuming age 80, then the divisor for 2013 would be 10.2 (age 80) reduced by one or 9.2.
Permalink Submitted by Alan - IRA critic on Fri, 2012-12-28 00:03
Yes, good catch. 9.2 would be the 2013 divisor, then 8.2 etc.