My mother recently passed and has a Traditional IRA (180K) in her estate. The will states that assets are to be divided equally between myself, brother and sister. The problem is that my brother, who is also the executor of the estate, is listed as the only beneficiary on the IRA.
Any ideas on how to disburse the funds somewhat equitably between the three within a five year period?
One thing that surprised me regarding IRA beneficiaries happened with my grandmother's IRA at Vanguard, which was subject to whatever % outlined in the letter the executor of the estate sent them.
At Vanguard, their approach was the following (your experience may vary with other firms):
After her passing, no activity could take place in the account, because it was legally in the name of a deceased individual, and only she had access to it. Therefore, all assets in her IRA had to be transferred to an "intermediate" IRA (forgot the legal title of it, something referencing grandmother's name and estate, etc.). From this intermediate IRA was taken that year's RMD, since she hadn't taken a distribution from it yet in the year of her passing.
Then, from this new intermediate IRA was then distributed shares to the various heirs into new Beneficiary IRAs at Vanguard (they wouldn't let us do a direct transfer to another broker,it HAD to first be deposited into a Vanguard Beneficiary IRA for each heir, even if you weren't going to keep it at Vanguard!)
The estate executor had to send a letter into Vanguard instructing them how to distribute up the percentages of the intermediate IRA into each heir's own beneficiary IRA.
I found it odd that they completely relied on the letter from the estate executor to tell them how to divide up the IRA, considering that grandma had filled out her IRA form for beneficiaries (I helped her fill it out personally, so I know it was done properly). This was important, because her IRA beneficiary information differed from her Revocable Trust percentages, and I made sure the executor followed the original IRA beneficiary %, and not the Revocable Trust.
As I said, your experience may vary at another firm, and Vanguard may even have different rules and procedures. Even though Vanguard is a great low expenses firm, I found their "Account Transition Team" (polite way of describing their Estate department that handles Vanguard accounts of deceased people) to be somewhat clueless and incompetent with the information and service we received overall, for both her IRA and a taxable investment account she had.
So, to respond to your post - depending on the company it's at, and depending on their rules and procedures, it may be possible to use a different percentage than what was originally listed, without having to go through complex official disclaiming letters, etc.
Is that technically legal? It's kind of a gray area - the 'intermediate' IRA that all of the funds went to technically didn't have the beneficiary information filled out, so it would take a different legal path than the original IRA. And that could legally permit the executor to simply use whatever % they want.
Kind of makes me a little nervous about just how rock solid some forms are that we fill out with brokerages, and how less-than-competent staff can unravel it all.