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Probate IRA ?

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sean_sarah

Junior Member
What is the name of your state?Hi,
My Mom was resident of NY and did not have a husband at the time of her death. She had an IRA which named beneficiaries as "To my descendants per stirpes". She left four kids including myself.
Does this IRA have to go through probate before it can be distributed to her kids? If not what is the process to resolve the IRA
Thank you
Scott
 


pojo2

Senior Member
sean_sarah said:
"To my descendants per stirpes".
I do not know what the particular term means so I can not address that issue.

However, an IRA is one of those peculiar assets that requires special tax consideration by the beneficiaries.
 

Dandy Don

Senior Member
Contact the company holding the IRA and see what they have to say about it.

That designation, "descendants per stirpes", was not the best way to designate beneficiaries. She should have named each of her children individually--how is the IRA company supposed to know who her children are? If you supply them with the names of the children, they can go ahead and issue a check to each child. Otherwise, if they won't do that it will have to go into the estate for probate.

Did she even leave a last will and testament?

DANDY DON IN OKLAHOMA ([email protected])
 

noname87

Member
I am in a similar situation in NJ. The rules for an inherited IRA are very different then a normal IRA. You really should discuss this with an estate lawyer or a CPA familiar with the rules. The answers to your questions depends on your mother's age, if she started to take distributions and what the beneficiaries want to do. If you request a check, it is considered income and CANNOT be rolled over into an IRA. You can set up a inherited IRA (different then a regular IRA) if you do a direct institution to institution transfer.

As for the estate. The IRA is considered an taxable asset of the estate. It is distributed according the listed benificaries of the IRA not the will unless the estate is listed as the benificary of the IRA. If the estate is small then federal estate taxes should not be a issue. I don't know about NY taxes though.
 

pojo2

Senior Member
noname87 said:
The IRA is considered an taxable asset of the estate. It is distributed according the listed benificaries of the IRA not the will unless the estate is listed as the benificary of the IRA. If the estate is small then federal estate taxes should not be a issue. I don't know about NY taxes though.
Not quite true. It is a potentially taxable asset to the beneficiaries and NOT the estate. It can be quite complex to if all records are not kept.

Very few things are taxable to the beneficiaries but this CAN be one exception.

Also since my response is based purely on the post and I do not have any relevant facts this is but a small bit of info and should be researched by the beneficaries.

This is from http://www.irs.gov

What If You Inherit an IRA?
If you inherit a traditional IRA, you are called a beneficiary. A beneficiary can be any person or entity the owner chooses to receive the benefits of the IRA after he or she dies. Beneficiaries of a traditional IRA must include in their gross income any taxable distributions they receive.
 
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noname87

Member
What I meant was that if the estate is taxable (i.e over 1.5 million) then the IRA is counted as an asset and is subject to estate taxes. The beneficiaries then receive a deduction for the amount of taxes paid on the IRA (equal to estate taxes paid-estate tax if IRA was not included). At least that is what my estate lawyer and my accountant claims. This gets complicated to clearly explain which is why I suggest contacting a CPA. Any distribution from the IRA will also be taxable event.


pojo2 said:
Not quite true. It is a potentially taxable asset to the beneficiaries and NOT the estate. It can be quite complex to if all records are not kept.

Very few things are taxable to the beneficiaries but this CAN be one exception.

Also since my response is based purely on the post and I do not have any relevant facts this is but a small bit of info and should be researched by the beneficiaries.

This is from http://www.irs.gov

What If You Inherit an IRA?
If you inherit a traditional IRA, you are called a beneficiary. A beneficiary can be any person or entity the owner chooses to receive the benefits of the IRA after he or she dies. Beneficiaries of a traditional IRA must include in their gross income any taxable distributions they receive.
 

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