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Greetings, RobhW, and welcome. You asked:

<<A family friend has just passed away and his wife must now makes some financial decisions. They are both past 70 ½ years old and they were withdrawing from each of their IRA's.

Should the wife keep withdrawing from the IRA?

Should/Can the IRA be put into their Living Trust?

How can she avoid Estate Tax on the IRA? >>

Whether she moves her hubby's IRA to her own IRA or not, because she is past age 70 1/2 minimum mandatory withdrawals must continue or she will pay a 50% penalty on money she should have taken but did not. If the living trust was not the beneficiary of the deceased's IRA, then the only way she can get the money into that vehicle is to cash it in (thus incurring the income taxes due on that event). She may then put whatever is left after taxes into the trust. Is there an advantage to her in doing that? Only she and her tax advisor can answer that. And as to the estate tax, if the husband's estate (which includes the IRA) is large enought to incur one ($675K this year), then the estate tax must be paid. There is no way to avoid that.

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