IRA in Probate
A client died, and for some reason his IRA needs to go through probate. He hadn’t taken his RMD before death.
Question: who and how to take RMD when the IRA is in probate?
A client died, and for some reason his IRA needs to go through probate. He hadn’t taken his RMD before death.
Question: who and how to take RMD when the IRA is in probate?
Permalink Submitted by Alan - IRA critic on Mon, 2024-11-04 18:45
It only needs to go to probate if the client’s estate inherited the IRA due to failing to name a beneficiary. That will subject the IRA to probate as it will eventually pass according to the client’s will, or if no will state intestate provisions.
The deadline to complete the year of death RMD is 12/31/2025 if client passed in 2024. This provides time to determine if the executor of the estate will be able to assign the inherited IRA to the will beneficiaries in time for them to complete and be taxed on the year of death RMD. But if this process is not completed by late in 2025, the estate will have to take the 2024 RMD, but might be able to pass the taxable income through to the will beneficiaries on a K1. An alternative is that the money will be needed to pay the costs of the estate, final debts and taxes, etc, and there would be nothing left to pass to the estate beneficiaries. The estate would then owe the tax at the higher estate tax rates to the extent that these expenses would not be deductible by the estate.