Estate as Beneficiary of IRA

Submitted by Joanne Sternlieb on Tue, 2014-03-25 14:41

We are the custodian of an IRA for a client who was in pay status when he died. He named his estate as the beneficiary of his IRA. The Executor wants to transfer the IRA directly to a GST trust that was created under the client’s Will. We have told the Executor that the IRA needs to be paid to the estate first, renamed as an inherited IRA account for the benefit of the estate. Then he, as Executor, can create a new inherited IRA account in the name of the GST Trust, e.g., Client, deceased, Beneficiary IRA f/b/o XXX Trust. Can you please let me know if this two step process is correct. Also, we believe the first transfer will not be a distribution triggering income tax. Will the Executor’s transfer of the inherited IRA from the estate account to an account in the name of the GST trust be deemed a distribution or can the IRA still be paid out over the deceased client’s life expectancy to the trust beneficiaries?



Submitted by Peggy Fisher on Tue, 2014-03-25 15:30

If the executor files a qulaified disclaimer prior to nine months after the participant’s death couldn’t he then  set up the GST Trust as the benificary for the new inherited IRA without triggering any tax liablity?  and you remember to list the new beneficiary prior to September 30th of the year folloiwng the year of the IRA owner’s death.

Submitted by Bruce Steiner on Tue, 2014-03-25 21:33

How can the executor disclaim his/her own decedent’s assets?

Submitted by Peggy Fisher on Wed, 2014-03-26 15:15

I resmitted your quesiton.  I am not confident in my answer and do not want to mislead you regarding what the executor can do.  IF the executor can disclaim how to to disclaim is below.A “qualifed disclaimer” means an irrevocable and unqulified refusal by a perons to accept all or a portion of an interest in property, but only if the folliwng four requirements, speecified in IRC 2518 are satisfied:1.  The refusal is in writing.2.  The refusal is received within the time period specified in IRC 2518 (generally 9 months after the IRA owner’s death or if later, 9 months fromt he date the beneficairy attains age 21).3.  Generally, the beneficiary has not accepted any interest inthe property.4.  The interest passes wihtout direction fromthe individual making the disclaimern.

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