IRA left to Estate
My husband died leaving his IRA to his estate.
Our attorney who is also a CPA states we can transfer this IRA that was left to his estate, tax free, from the estate IRA to an IRA BDA for our daughter (per testamentary will) and to a trust that was established (per testamentary will). Those accounts are titled IRA BDA FBO Daughter and Trust U/W IRA BDA.
Our broker/dealer will not allow this claiming that the account must distribute to the estate from the initial IRA left to the estate and that the estate must pay the taxes.
Is our attorney and CPA correct or is the broker/dealer correct?
Permalink Submitted by Jose Morales on Thu, 2015-03-12 17:30
It’s not so much a question of who is correct, but rather what the IRA Custodian will allow in this situation. The best option in this situation is to find an IRA custodian that is willing to work with you and have the assets transferred to that custodian. Often custodians either do not have the expertise to sort through complicated beneficiary situations or they just choose to take the easiest route to solve “the problem” and limit the available options when an IRA is left to an estate either on purpose or due to no beneficiary being named. It’s always a good idea to make an affirmative beneficiary designation when you know exactly who should be left the funds in an IRA, as it helps avoid these situations.