My client stands to inherit $300,000 in an IRA from his 94 year old mother . Even if we stretch the IRA for 10 years this inheritance puts client in a much higher tax bracket living in California. If his minor son, age 13 is the contingent beneficiary can my client disclaim all or part of his IRA from his mother so that my client’s tax burden is less?
2nd part. Since my client’s son is a minor can the custodian of the IRA be my client ?
If my client in the above example disclaims his IRA to his 13 year old son and we set up the IRA UTMA Custodian account, can my client be the custodian? Example:Ernie Father, disclaims his IRA From his momSammy, is Ernie’s 13 year old son.The registration on the account will be:Inherited IRACustodian Ernie FBO UTMA of Sammy or Should we put mother, Sara as the Custodian of Sammy’s Inherited Custodian IRA Account?Hope this example helps.
State UTMA statutes could vary on this. If Sara could handle the custodian functions, it would probably be safer to name her as UTMA custodian. Either way, any UTMA custodian functions as a fiduciary for the child and has legal liability for failing to act in the best interests of the child. It’s possible that the IRA custodian also has their own requirements.
Permalink Submitted by Alan - IRA critic on Wed, 2022-01-26 19:50
Yes, client can file a full or partial disclaimer, and if he needs to complete mother’s year of death RMD, that will not invalidate the disclaimer. However, withdrawing more than her remaining RMD will. I don’t follow your second question. While the minor cannot inherit directly, they can inherit through an UTMA account. The IRA custodian cannot be the UTMA custodian for the minor. That role usually falls to a family member.