Estate disclaiming beneficial interest to achieve a stretch
Client died after naming her Estate as the sole beneficiary of her IRA. As it turns out, there is only one beneficiary of the Estate left under the terms of her Will. Can the Executor of the Estate disclaim their beneficial interest in the IRA and change the beneficiary to the individual beneficiary of the estate in order to achieve a stretch via an Inherited IRA account?
Permalink Submitted by Alan - IRA critic on Thu, 2014-09-25 21:15
If the executor disclaims they cannot re direct the IRA to any particular person. The default beneficiary of the IRA would very likely be the estate as well. If the will beneficiary is the surviving spouse, good chance the spouse could do a rollover, but if not a surviving spouse there is no way to extend the RMD distribution period for an estate beneficiary.
Permalink Submitted by Bruce Steiner on Sun, 2014-09-28 04:18
An executor can’t disclaim assets passing from the decedent. An executor may, however (with court approval in some states) disclaim assets passing to a decedent from someone else.
Permalink Submitted by Alan - IRA critic on Sun, 2014-09-28 20:44
Bruce, if the executor cannot disclaim, could the beneficiary under the will disclaim within the time limit after the executor has the IRA assigned to that beneficiary? Or would the executor’s action’s with respect to assigning the IRA constitute acceptance of the IRA?
Permalink Submitted by Bruce Steiner on Sun, 2014-09-28 21:53
The executor has no choice but to accept the IRA, since it was the decedent’s IRA. The beneficiary of the estate could disclaim some or all of his/her interest in the estate, in which case (unless the Will provides otherwise) the estate, or the disclaimed portion of the estate, would pass as if the beneficiary predeceased the decedent. That won’t change the period over which the IRA has to be distributed.