IRA disclaimer, Trust and RMD
Hi my mother disclaimed my father’s IRA into a family trust created for
4 children. My father passed away 11/05, mother disclaimed 8/06 (within the 9 months), her attorney, cpa and broker frantically called her the end of December telling her to take a RMD from the trust IRA, as well as a smaller IRA she inherited and rolled over into her IRA, is this correct? ❓
Permalink Submitted by Alan Spross on Thu, 2008-01-10 21:44
December of what year? Since your mother disclaimed by the deadline, and IF the trust is qualified, the RMDs for 2006 and 2007 would be based on the oldest trust beneficiary’s life expectancy.
For her own IRA, any RMD would be based on her own age. Any RMD your father should have taken, but did not also needs to be distributed.
If distributions were not taken properly, they should be taken ASAP, and a request filed to excuse the penalty with Form 5329.
What was father’s age at his death, and also Mom’s age?
Permalink Submitted by Suzanne Rua on Thu, 2008-01-10 23:00
Thanks for the reply. Her advisors called 12//15/07. The family trust is qualified. My mother’s birthdate is 4/30/28, my father was 82 when he died. Her IRA is valued over $500,000, with additional taxable investments. The disclaimed IRA has a value close to 2 million.The necessary paperwork has been filed, the concern was they
waited too long to tell her, and she was questioning their ability to
handle the estate in the future. She is researching more qualified stretch
IRA specialists. Thank you again for your help
Permalink Submitted by Bruce Steiner on Fri, 2008-01-11 04:48
I don’t understand the reference to your mother having to take required distributions (except from her own IRA). Since she disclaimed, so that the family trust became the beneficiary, the trustees of the family trust have to take the required distributions each year. Whether the trustees of the family trust may or must then make any distributions to anyone depends upon the terms of your father’s Will, or the trust agreement.
Given your mother’s age, having the IRA go to a family trust doesn’t provide much in the way of stretchout, though without knowing all of the details regarding your parents’ assets one cannot say whether the disclaimer in favor of the family trust made sense or not.
Bruce Steiner, attorney
NYC
also admitted in NJ and FL