IRA with sole beneficiary-effect of disclaimer
Decedent, age 90, died testate. Estate beneficiaries are two children per stirpes. IRA names one child as sole beneficiary (with no per stirpes provision in IRA). No contingent beneficiaries named. If beneficiary disclaims the IRA and it goes to an IRA in the name of the estate, may executor distribute the IRA to only one of the four beneficiaries of the estate (the one with lowest taxable income) as part of that beneficiary’s proportional share of the estate? No stretch is desired.
Permalink Submitted by Alan - IRA critic on Sat, 2018-06-09 16:55
First, the disclaiming beneficiary cannot receive any of the IRA through the estate as stated in Sec 2518. That means this beneficiary would also have to disclaim any interest in the IRA from the estate. The disclaimant may not be able to receive an equivelent amount of cash to offset the tax adjusted value of the disclaimed IRA, and state law should be consulted. If the will provisions are silent and executor has total discretion to make non fractional distributions of assets, the executor should secure signoffs from all parties regarding the intended distribution, particularly due to the tax adjusted implications of assigning the IRA disproportionately. An estate attorney should be retained to make sure that the distribution is handled correctly from both a legal standpoint and also to prevent disputes from beneficiaries and legal liability of the executor. These are just a few of possible factors entering into this plan.