Message Font: Serif | Sans-Serif
No. of Recommendations: 1
My condolences on the loss of your grandmother. You wrote:

I'm waiting to here back from my contact at the bank to find out the balance and how to close it out, etc.

One thing I can tell you for sure--don't rush.

The first question to resolve is whether or not there will be an estate tax liability. The value of the IRA is part of the taxable estate even if it doesn't flow through the trust. It is also taxable income to the beneficiaries when distributed. This could result in some special concerns on the beneficiaries' returns.

As a beneficiary you can roll your portion into an "inherited IRA" and take distributions over your actuarial lifetime. You must begin minimum distributions this year and are free to take any amount you want as long as you take at least that much each year. Because you inherited this IRA distributions are subject only to income tax. (I'm assuming here that there were no after-tax funds in the IRA.)

The question of whether, let alone how, you can transfer a portion of the IRA without taking taxable (to you) distributions to the "stiffed" cousins is beyond my pay grade. You could certainly take two-fifths of your share, figure out the effect on your income tax, and then send half the net to each of them as gifts.

Your vanilla inheritance distribution from the trust will not be taxable income to you.

Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.