Disclaiming
A father passes away leaving $ 1.4 million in IRA assets to his only daughter. Her attorney is recommending that she disclaim said IRA. Being that she is the one and only beneficiary listed, I am assuming that the IRA will then pass back to the fathers estate and be required to go through the probate process. I am also assuming that taxes would be due on the entire 1.4 million being that an estate would have no LE to determine any possible ” Stretch” opportunities. Any thoughts??
Permalink Submitted by Alan - IRA critic on Fri, 2015-05-15 19:46
The IRA agreement needs to be checked to be sure his estate is the default beneficiary. If so, the 5 year rule will apply if father passed prior to his RBD. If father passed on or after his RBD, the estate could stretch the IRA over father’s remaining Table I life expectancy. Who are the beneficiaries under his will? Individuals other than daughter?
Permalink Submitted by Richard Ernst on Fri, 2015-05-15 19:49
His daughter is the only benefactor.
Permalink Submitted by Ben Meyer on Fri, 2015-05-15 22:06
What would be the advantage to the daughter in making a disclaimer? It seems better for the daughter to continue as IRA beneficiary. Could there be a tax advantage in passing the IRA through the estate, possibly due to some provision of state law?
Permalink Submitted by Alan - IRA critic on Fri, 2015-05-15 22:25
The definition of qualified disclaimer in Sec 2518 requires that the property must pass to someone OTHER THAN the disclaimant.