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Condolences on your expected loss.

One of the sons has had his 59th birthday and the other 58th (both from a previous marriage). I assume they can choose to "stretch the distributions over their lifetime." Does this mean they must take an RMD each year even though they have not reached the age of 70-1/2 or must they start taking the RMD next year?

Yes. I've got an inherited IRA from my father, and I started taking RMDs when I was 45. I'm about to turn 58, and so far the growth of the account has been a bit more than the RMDs. That won't last forever, as the growth bar gets higher each year.

When the IRA is divided, must everything be sold first or can assets be distributed pretty equally?

The assets can be distributed equally.

You'll want to be in contact with the custodian to see how they handle this. The most straightforward way is, if the IRA holds 100 shares of a given security, each of the two heirs get 50 shares of that security. There may be some things that are not divisible; if this is the case, the custodian will need to distribute equal value to the two heirs. (This assumes the two beneficiaries are each due 50% of the IRA; if it's a different split, use the actual percentages.)

When I got 20% of Dad's IRA, there were a couple of things that weren't divisible. Dad had a professional firm as the executor. The rep doing Dad's estate talked to us and assigned the stuff that couldn't be divided in fifths as we all agreed, with more finely divisible assets being split to give the five of us equal value. We also had a dance with an RMD for the year of Dad's death, which your stepsons won't have to deal with.

What the heirs do with it after it splits is their business. If one of her sons wants to hold the preferred stocks and the other wants to liquidate them, they can each act as their situation and preference dictates.

Patzer
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