Inheritance/will question

[jimy]

I have a question about my fathers will. Dad has been in a nursing home with dementia for 4-5 years and currently doesn't speak or even open his eyes on most visits. He has been this way for a year or more. Mom passed away several years ago.



I am 58 and have been retired for about four years. About 3/4's of my (and my wife's) assets are in a traditional IRA - the rest is cash and a small Roth IRA.



Dad's will splits assets evenly between my sibling and I (and does not specify who would get what). I am the executor and POA for dad. My sibling's inheritance will go into a special needs trust managed by a local bank.


Several years ago I was convinced (by a lawyer - not the one that did my parents will) that it would be in everyone's best interest if I put myself down as beneficiary for both the traditional and Roth IRA. It was mentioned it would be a bad thing for my sibling to inherit considering the special needs trust, being on Medicaid and having housing/food paid for by the government. Perhaps it would have to be removed from an IRA and taxes be paid at the time of inheritance? I did mention this to my siblings lawyer and he seemed to think it was "OK" for me to be beneficiary for the IRA's.



So - I have been beneficiary for the IRA and Roth IRA for several years now. Is this a good thing? Here are some questions...


- I absolutely want my sibling and I to get the same total dollar amount.

- Since I am 58 and already heavy in traditional IRA's - the (smallish) Roth would be great for me, as would the non-IRA mutual funds. The traditional IRA perhaps not - I really wonder if being the beneficiary for the trad IRA is a mistake.

- There is also some family acreage (that both of us are sentimental about) that I would likely need to inherit.


OK - I'm not sure those were questions! Let's do that now.


1 - I assume if I continue to be beneficiary for the two IRA's, that is cast in stone and WILL happen (unless I'm dead)? That is certainly easy and avoids a bit of lawyer costs.

2 - I also assume that (with agreement between me, my sibling, and lawyers) the rest of the assets can be dispersed in such a way that I and my sibling can get the same total dollar amount inheritance? That is, can we each receive a different blend of the 4-5 distinct assets as long as we each get the same dollar amount from Dad's estate?


As I write this, it certainly seems I need to talk to a lawyer ASAP - but I am curious to hear what folks here think...


thanks


J

 

[CRLLS]

IANAL. That said, by being beneficiary of the IRAs they are not part of the will and do not get split in any way. Assets with POD, TOD, beneficiaries joint accounts etc, and assets held in a trust are not covered by the will. That said, there is nothing saying that you cannot "gift" money to your sibling. A lawyer cannot control that whether you gift or not. And there is no legal action that can force you to do so that I am aware of.

Under the gifting scenario, if you are gifting periodically to (ahem) work the system, what happens if they survive you? Your handshake agreement to gift her annually is null and void and those assets become part of "your" estate to be distributed to your heirs. I would think this is not what your intentions are.

 

[OldShooter]

Yes, talk to a lawyer.

We have a SNT for one grandchild. It will be funded from IRAs. Our estate plan specifies that the Roths will be used for this. Why? If the SNT was funded from tIRAs, they must be drained within ten years. As a practical matter, this means that the beneficiary of the SNT will receive all the money over that ten years. For the SNT to retain the withdrawals instead of immediately distributing them would result in the retained amounts being taxed at the SNT tax rate, IIRC around 35% + state taxes.

So, if we don't want the trust to have only a ten year life and for the beneficiary to get more money than he is probably equipped to handle, we have to fund the SNT with Roth money. The Roth still has to be drained in 10 years, but there are no tax consequences for the SNT. The trustee can hold or distribute money to suit the beneficiary's needs.

The point here is that dividing the assets needs to be done very carefully if the SNT for your brother is to achieve yours and your father's objectives, hence finding a really good specialist lawyer and/or CPA is critical. It may not make tax sense for you to be beneficiary for the two IRA's --- IANAL and have no idea.

 

[Scratchy]

First, by all means, you should speak to an attorney. Make clear to the attorney you are retaining him as representation for you as POA for your father, and he will be paid with funds from the estate.

I am not an attorney but have been executor/trustee for two estates. Also these things can be state specific but a couple comments I have:

-The SECURE act changed the landscape for the inheritance of retirement accounts including in ways that affect individuals who have special needs trusts. If the last time you spoke to an attorney was pre SECURE (the legislation was passed in 2019), perhaps the question of whether your sibling's special needs trust could be a beneficiary without adverse affect on government benefits may have changed. BTW, does your father's POA really allow you to change beneficiaries of his retirement accounts?

-Unless your father's Will states that you should distribute the estate evenly accounting for retirement benefits (doubtful and BTW how would you account for the issue of uneven taxation?), a potential issue is that you are effectively disclaiming some of the non IRA estate in favor of your brother (to even up for the retirement benefits). However, if the Will states that your shares are per stirpes, disclaimed assets should pass to your children, not your brother. If the Will does not address what happens if an heir disclaims, I don't know what would happen but perhaps the disclaimed shares would be distributed according to the intestacy laws of your state. At any rate, your children or other heirs may have a claim against you if they are entitled to any disclaimed assets. Now, you may have no children or you may not be able to conceive of them making a claim, but if the Will is probated, the court will have to sign off on it and that is what it may require. Also, any attorney you retain may raise this issue. If your father's assets are in a Trust and will not have to go through probate, perhaps the mechanics of disclaiming may be different as there would be less court supervision.

Edit: as mentioned above, accepting the inheritance and then "gifting" it to your sibling's SNT may be a workaround. The upshot is this is a complicated issue and you need good legal advice from a Trust and Estates attorney who is familiar with SNT.

 

[Sunset]

My thoughts (not a lawyer).

The will is cast in stone as are the beneficiaries via TOD/POD for accounts, and anything already in a trust.

So legally you cannot change anything.

Now, whatever will be in the estate at the time of death, can be sliced up whatever way the Will allows, so if the Will says everything divided equally, it means as long as the $$$ value is equal it's fine. Example: One could get the farm, and the other could get cash. <edit> Or you could have both get 1/2 the farm and both get 1/2 the cash.

Check with a lawyer, who knows about SNT's to find out for sure, if the IRA is going into the estate (no POD/TOD) to be divided by the Will , maybe it's better or worse for the sibling.

 

[Brat]

Oh dear, I went through that with my Mother's trust. The sibling on SSI can not revoke his inheritance to the benefit of the SNT. Mother had a grandson to inherit his mother's share of her estate. The attorney said that at the time the trust was prepared Mother didn't know if the grandson was on SSI. I knew he was and finally told Mother what would happen if she didn't amend the trust language, basically that he would be off SSI. She was still competent, but not the savvy woman she once was. The trust was amended to protect the grandson's benefits. When she heard of the cost of the SNT and his situation she decreased his share slightly to balance his inheritance in line with others and to prevent him from spending wildly.

I wonder if it wouldn't be wise for estate lawyers to include a clause in trusts and wills to redirect monies to a SNT if an heir is on SSI.

 

[RetiredHappy]

Regarding IRAs:
- You can disclaim half and the other half will go to your sibling even though his name is currently not a named beneficiary.
- Your inherited IRAs will need to be drained within 10 years, which will not hit your RMD age (72 yo).
- I think someone who has special needs can use RMD table to withdraw instead of having the 10-year limit to empty the account.

As others have mentioned, IRAs' beneficaries are not covered in the will. To be equitable, assuming it is the wish of your father, you should count the IRA money in the asset division, although they are excluded from the will.

 

[SecondCor521]

A couple of comments:

It will depend on how your father's POA was written - I have a durable POA for my Dad, which means that if he were to get dementia, the POA is still in force. Some POAs are not durable, which means that they lose their utility and authority when the person becomes mentally incompetent.

This means that your original change to set yourself as the beneficiary may or may not have been valid, depending on if the POA was durable and/or if your father was capable of making that decision when it occurred.

If your brother is totally and permanently disabled, there is an exception to the SECURE Act where distributions can still be lifetime RMDs. That may or may not work for your family.

There is also a little known law called TEDRA, which essentially allows all the beneficiaries to get together and agree to change the division of property contrary to what the will stated. The idea here is that sometimes wills may not be up to date, and if there is a better division of property that all the beneficiaries agree to and some documents are signed, then they can do that. We did this with my Mom's estate for technical reasons I don't even recall, but the gist of it was that my Mom's will was written in 1999 and she passed away in 2016, and both the tax and estate laws had changed enough and my parent's situation had changed enough that it made sense to change things. Warning - doing this was a rather expensive process because there were lots of lawyer hours involved.

If you are listed as a beneficiary, you can disclaim anything (or depending on state law, part of anything) you inherit, and that thing will pass as though you had predeceased your father. Depending on what applies, this could mean that the thing goes to your brother, or your kids, or maybe someone else. Something to put in your toolbox, though.

If you accept an inheritance and then gift it away to someone else (like your brother), then those gifts would be subject to gift tax depending on the amounts and timing of the gifts.

I also agree with what the others have said - if your Dad's will said to split things equally and there is no more specificity, then as long as you comply with the beneficiary designations, you can split everything else up however you (as executor) decide among the various assets.

And I do want to correct something else that was mentioned above. Even though your Dad's IRA may pass outside the will via beneficiary designation, the value of the IRA is still part of your father's estate. So with the likely interpretation that your father loves his children equally and wants to split everything share and share alike, then if he had a $200K IRA with you as the sole beneficiary and a $300K farm and a $100K checking account, then each of you and your brother would get half or $300K of the whole thing. So you would get the IRA because you're the beneficiary, and you could (as executor) give yourself the checking account to get you to your $300K, and your brother could get the $300K farm for his half. It is emphatically *not* the case that simply because the IRA lists you as a beneficiary that you would get that alone and you and your brother would then equally split the $400K other items equally, with you ending up with $400K and your brother ending up with $200K. The point is that beneficiary designations bypass the probate process (meaning they're distributed not by the executor but by the beneficiary designation), but are still part of the estate for purposes of equitable division.

Finally, I'd think it would be very wise and proper to discuss the entire situation with a special needs attorney. Special needs stuff is a complicated area, and good and thoughtful decisions can go a long way towards setting up your brother as best as can be done. There are, in my limited understanding, plenty of ways where additional income or assets can upset government benefits. It's getting better with ABLE accounts I think, but still an area where a lot of care must be taken. Hopefully your brother already has someone in his corner looking after this stuff, but if not you may need to help him find someone.

 

[Sunset]

A couple of comments:

...

And I do want to correct something else that was mentioned above. Even though your Dad's IRA may pass outside the will via beneficiary designation, the value of the IRA is still part of your father's estate. So with the likely interpretation that your father loves his children equally and wants to split everything share and share alike, then if he had a $200K IRA with you as the sole beneficiary and a $300K farm and a $100K checking account, then each of you and your brother would get half or $300K of the whole thing. So you would get the IRA because you're the beneficiary, and you could (as executor) give yourself the checking account to get you to your $300K, and your brother could get the $300K farm for his half. It is emphatically *not* the case that simply because the IRA lists you as a beneficiary that you would get that alone and you and your brother would then equally split the $400K other items equally, with you ending up with $400K and your brother ending up with $200K. The point is that beneficiary designations bypass the probate process (meaning they're distributed not by the executor but by the beneficiary designation), but are still part of the estate for purposes of equitable division.

.....

Hopefully others will comment as I would like to know which way is really true.

The Bold part, I agree IRA beneficiary is distributed outside the Will and it is considered part of the estate, but I think it's only considered part of the estate for taxation purposes, not distribution.

In this example I think it would go this way:
OP gets the $200K IRA as the sole beneficiary.
The Farm of $300K and checking account of $100K are split evenly (in this Will).

So OP gets $400K and sibling gets $200K.

If the State taxed all estates, it would tax the total estate of $200K + $300K + $100K = $600K estate

 

[Scratchy]

A couple of comments:

And I do want to correct something else that was mentioned above. Even though your Dad's IRA may pass outside the will via beneficiary designation, the value of the IRA is still part of your father's estate. So with the likely interpretation that your father loves his children equally and wants to split everything share and share alike, then if he had a $200K IRA with you as the sole beneficiary and a $300K farm and a $100K checking account, then each of you and your brother would get half or $300K of the whole thing. So you would get the IRA because you're the beneficiary, and you could (as executor) give yourself the checking account to get you to your $300K, and your brother could get the $300K farm for his half. It is emphatically *not* the case that simply because the IRA lists you as a beneficiary that you would get that alone and you and your brother would then equally split the $400K other items equally, with you ending up with $400K and your brother ending up with $200K. The point is that beneficiary designations bypass the probate process (meaning they're distributed not by the executor but by the beneficiary designation), but are still part of the estate for purposes of equitable division.

I have handled two estates and IRA distributions were outside of the probate/trust estates and did not affect the distribution of the remaining assets. I would imagine a Will or Trust could specify that the distribution of the non IRA estate should take into account IRA asset distributions, but I would guess this would be unusual (and how would one account for the fact the IRA assets will ultimately get taxed whereas non IRA assets would not). If the Will or Trust is silent on the IRA distributions, I am quite certain one would not be permitted to account for them in distributing the estate.

BTW my own estate plan includes the distribution of one of my retirement accounts, and life insurance policies to individuals in varied shares. These are not shares in the same proportion to the equal shares that these individuals receive from the remainder of my estate. The notion that my trustee would look into what those were and make adjustments in the rest of my estate plan when distributing the trust assets, is not my intent at all and would probably make me turn over in my grave. My intent was to divide the corpus of my estate equally amongst certain relatives but to give a little extra to a couple of individuals for very good reasons.

Therefore to state that:

"It is emphatically *not* the case that simply because the IRA lists you as a beneficiary that you would get that alone and you and your brother would then equally split the $400K other items equally, with you ending up with $400K and your brother ending up with $200K. "

is simply not true. It could, and likely would, be the case that the non IRA estate would be divided without accounting for the IRA. Just because a different arrangement sounds more fair does not mean it is legal.

If one wants their estate to be divided equally, the best approach is to divide assets without named direct beneficiaries equally and then also divide the assets with named direct beneficiaries (like IRA's, life insurance) equally. To just say in a Will your assets should go equally to your children and expect the executor to account for IRA/life insurance asset distributions is not an approach I have ever heard of and I doubt would be recommended by any attorney-again it would open up a can of worms with respect to how to account for differential taxation of these assets.

Again, obviously a competent lawyer is needed.

 

[Scratchy]

Hopefully others will comment as I would like to know which way is really true.

The Bold part, I agree IRA beneficiary is distributed outside the Will and it is considered part of the estate, but I think it's only considered part of the estate for taxation purposes, not distribution.

In this example I think it would go this way:
OP gets the $200K IRA as the sole beneficiary.
The Farm of $300K and checking account of $100K are split evenly (in this Will).

So OP gets $400K and sibling gets $200K.

If the State taxed all estates, it would tax the total estate of $200K + $300K + $100K = $600K estate

This is correct in my experience. And the Wills I handled stated that estate taxes, if due, were to be paid from the probate estate. As it turned out, no estate taxes were due so that was not an issue, but it was addressed in the Wills.

 

[ExFlyBoy5]

OP, your situation sounds just like a "hypo" that would be given to a law student taking a trust and estates exam so...talk to a lawyer. Advice from strangers on the internet who admit to not being lawyers LOVE giving legal advice. I know a few attorneys that are on this board and I don't think any of them are saying anything. There is a reason for that.

 

[Scratchy]

A couple of comments:

There is also a little known law called TEDRA, which essentially allows all the beneficiaries to get together and agree to change the division of property contrary to what the will stated. The idea here is that sometimes wills may not be up to date, and if there is a better division of property that all the beneficiaries agree to and some documents are signed, then they can do that. We did this with my Mom's estate for technical reasons I don't even recall, but the gist of it was that my Mom's will was written in 1999 and she passed away in 2016, and both the tax and estate laws had changed enough and my parent's situation had changed enough that it made sense to change things. Warning - doing this was a rather expensive process because there were lots of lawyer hours involved.

The law in this area is state specific. If there is such a law in your state that does not mean there is a corresponding law in New York, where the OP is.

 

[Scratchy]

OP, your situation sounds just like a "hypo" that would be given to a law student taking a trust and estates exam so...talk to a lawyer. Advice from strangers on the internet who admit to not being lawyers LOVE giving legal advice. I know a few attorneys that are on this board and I don't think any of them are saying anything. There is a reason for that.

The problem almost every person has when going to see a trust and estates lawyer is that the law in this area is so arcane that it is very difficult to grasp what the lawyer is saying. The lawyer has their eye on the clock and is unlikely to want to spend a great deal of time educating you on a vast and difficult to comprehend subject. And, as in any profession, the practitioners vary in competence and some may not be up to your particular needs but may not bow out as they should.

All to say that the more one knows about this subject, the better off one is, IMO, as one can better follow along, ask the right questions, make more informed decisions, and judge whether the attorney is up to the task.

My point is, yes, of course see a lawyer and take anything said by SGOTI with a grain of salt and recognize it is not legal advice. But educating oneself as best as one can including asking questions in a forum like this one is a reasonable, even wise thing to do IMO. One has to start somewhere and the place to start is probably not when the clock starts in the lawyer's office.

 

[SecondCor521]

Other posters seem to gloss over the part where I wrote:

So with the likely interpretation that your father loves his children equally and wants to split everything share and share alike

Based on the OP's description, I think it is extraordinarily unlikely that it was the father's intent to give his able son $400K and his disabled son $200K. I believe in the OP he said something about making sure he and his brother got equal dollar amounts in total.

But I agree that it would depend on the specific wording in the father's will as to what assets would be equally distributed. Whether father's will said "I leave the entirety of my estate equally to my two sons" or "I leave my probate estate equally to my two sons" would result in two different outcomes.

Hopefully the father's will was drafted by a competent estate planning attorney who was aware of the IRA and the fact that the father had two sons and that one was disabled, and was able to draft it to accurately reflect the father's intent.

And if the will is ambiguous in this regard, I would hope that the OP as executor would distribute according to the best of his knowledge what his father's wishes were. He may technically be able to get away with a $400K/$200K unequal division. He may technically not be able to effect an equal division if the will was written poorly. But I think it is also likely that he will be able to effect an equal division overall within the written terms of the will and will do the right thing by his brother.

ETA: And I do agree with ExFlyBoy's opinion above that OP really should just be using this for background learning in order to at least be somewhat prepared when talking with a competent attorney in his father's state of domicile.

 

[CRLLS]

DW is going thru this right now. The estate's lawyer was emphatic that the "estate" is to be handled according to the letter of the will and that the TOD's IRAs and other accounts with beneficiaries are not counted as part of the estate as far as distribution goes. They are separate entities except for taxation/gifting.

From my research, only if the IRAs, other financial accounts and real estate had no beneficiaries/TOD/POD/Joint owned accounts w/ROS declared on their respective accounts, or the beneficiary was named as "The Estate of xxx", then and only then, those assets become owned by the estate and distribution would be handled according to the will. If the will went thru Probate, I would think that the courts would oversee the actions of the Executor. As such, I would guess that they would not allow including those account values as part of the estate.

Let's change the situation just a bit. Let's say there were 3 siblings, S1 was just one of 3 beneficiaries, S2 had been named sole beneficiary of the IRAs and S3 was named the executor. The IRAs would immediately transfer to S2 upon presentation of a Death Certificate. There is nothing S3 can do to claw that money back into the estate. Further, if S3 decided to include that IRA amount as part of S2's 1/3rd of the estate, there would likely be a lawsuit filed by S2. S2 would likely win IMO

Now if the estate is handled via a small estate affidavit, that is different. There is little, if any, oversight. If there are only 2 beneficiaries and they agree on the distribution, then who is to call "foul"?

 

[Sunset]

Didn't gloss over it, but a Will cannot simply be ignored/modified by the executor.

. So with the likely interpretation that your father loves his children equally and wants to split everything share and share alike, ....

What the executor can do legally, is not simply up to the whim of the executor.

This is why people have to think carefully about their Estate planning.

If I have 2 children, and my Will leaves everything to 1 child, even though I tell the everybody I love them equally. Everything in the Estate goes to the 1 child.

Once the estate is done, family can gift to other's to make up for any deficiency they may feel occurred in the Estate planning.

Lots of mistakes happen with Estates. Just recently a relative died and left her house to 2 people, problem is that when the relative died, she didn't own the house anymore.

 

[jimy]

Thanks for all the great responses. I'm thinking it may be best to remove myself as the beneficiary for the two IRA's. That will put things back to what my parents and their elder care attorney put in place originally. I should not have followed the advice I got to put myself as beneficiary. But I will of course consult the lawyer first...


Jim

 

[SecondCor521]

I'll try one more time to clarify my comments and if I'm still not clear enough I guess I will give up.

Didn't gloss over it, but a Will cannot simply be ignored/modified by the executor.

What the executor can do legally, is not simply up to the whim of the executor.

I know both of those things and I agree with both of those things and I don't believe I wrote anything on this thread or anywhere else to indicate otherwise. But I admit I may have been less than clear.

My whole (primary) train of thought is:

1. It is highly likely that this father loved both of his sons equally. Most fathers, including me, do.
2. It is also highly likely that this father therefore intended an equal division of property. Many fathers, including me, do.
3. If the father intended an equal division and had his will prepared by a competent attorney, the language of the will should have reflected the father's intent accurately and taken into account any beneficiary designations that may have affected that division.
4. If all of the above is true (and I tried to write it in a way that those assumptions were spelled out as preconditions to my conclusion), then the son as executor would be able to follow the language in the will and effect an equal division.

Secondary comment / train of thought:

A. If the will was not well written, there could have been ambiguity. If the OP knew well his father's intent and this ambiguity in the will existed, then I think it is both legal and ethical for the OP as executor to effect a property division that both complies with the ambiguous language in the will and reflects his father's intent.

This is why people have to think carefully about their Estate planning.

Agreed. And why they should seek competent counsel and ensure that the final work product of the attorney takes into account the person's entire estate picture and accurately reflects their wishes. Given legal language and the obvious confusion over many estate topics as this and many other threads here indicate, this can be a tall order sometimes.

If I have 2 children, and my Will leaves everything to 1 child, even though I tell the everybody I love them equally. Everything in the Estate goes to the 1 child.

Agreed, never said otherwise AFAIK. (ETA: Well, unless your beneficiary designations or occasionally state law say otherwise. ;-) )

Once the estate is done, family can gift to other's to make up for any deficiency they may feel occurred in the Estate planning.

Yes, but as noted above, such gifting would be subject to gift tax, which if a family might face estate taxes someday, is something to be considered. (If not, then yes, it's just a moderate hassle to file the appropriate IRS gift tax return.) There could be other tax issues as well - gifting part of an inherited IRA would require a distribution first which would be taxable to the OP.

Lots of mistakes happen with Estates. Just recently a relative died and left her house to 2 people, problem is that when the relative died, she didn't own the house anymore.

Agreed.

 

[RunningBum]

Didn't gloss over it, but a Will cannot simply be ignored/modified by the executor.



What the executor can do legally, is not simply up to the whim of the executor.

This is why people have to think carefully about their Estate planning.

If I have 2 children, and my Will leaves everything to 1 child, even though I tell the everybody I love them equally. Everything in the Estate goes to the 1 child.

Once the estate is done, family can gift to other's to make up for any deficiency they may feel occurred in the Estate planning.

Lots of mistakes happen with Estates. Just recently a relative died and left her house to 2 people, problem is that when the relative died, she didn't own the house anymore.

Curious about what happens in a case like this, when an executor doesn't follow the will and is one of the beneficiaries, and does it to the benefit of the other beneficiary. Who is going to oversee this or complain?

 

[SecondCor521]

Curious about what happens in a case like this, when an executor doesn't follow the will and is one of the beneficiaries, and does it to the benefit of the other beneficiary. Who is going to oversee this or complain?

In theory, any beneficiary or interested party who disagrees with the outcome enough to sue the executor. Or, I suppose, any bank or financial institution holding an asset of the decedent where the institution's process for inheritance isn't properly followed. If a creditor of the estate got stiffed, they might object. If the probate court noticed, they also could intervene.

In practice, as long as the institutional process is followed, all debts of the decedent are satisfied, and nobody else minds, quite possibly nobody. I don't think the probate courts actually look unless someone complains.

In the case of the OP, the only people I could imagine would be OP's kids, because they might consider themselves to be likely to have inherited more from their Dad if it weren't for Dad giving away "their" inheritance to Uncle. But in practice I doubt any kids are paying attention that much and or would take that sort of antagonistic approach of suing their parent.

 

[Scratchy]

In the case of the OP, the only people I could imagine would be OP's kids, because they might consider themselves to be likely to have inherited more from their Dad if it weren't for Dad giving away "their" inheritance to Uncle.

Pretty sure a lawsuit like that would be thrown out of court faster than one could say "disinherited". A parent has no duty to maximize their own estate for their children. If your theory of damages was valid, could a child sue his parent for retiring too early?

Now, if the OP's kids were entitled to the portion of the grandfather's estate in the event the OP disclaimed (the share was per stirpes), and instead that money went directly to their uncle, then there could be a basis for a lawsuit, as I mentioned earlier in the thread. But that is based on their right to inherit from their grandfather, per the terms of the grandfather's Will. It is not based on their right to inherit from the OP (their father) as you are suggesting.

If the OP wanted the money to go to the uncle, an easy workaround, as mentioned earlier, would be for the OP to accept the inheritance first, rather than disclaiming, and then gift it to the uncle.

 

[SecondCor521]

^ Again I am misread.

I didn't say the lawsuit would have merit or be successful. I just said (or meant anyway) that they might try to bring one. People sue for dumber reasons all the time, and even if they don't succeed it can be a financial impact (and create family acrimony).

I disagree that the accept and gift approach is better than disclaiming. Accepting and gifting creates a different tax situation than disclaiming. By accepting, in the case of an IRA, then to gift those funds to the brother the OP (a) has to take distributions from the IRA (which may be required or desired anyway, true) but regardless create taxable income for OP which a disclaimer would not, and (b) creates gift tax filing or annual limitations, which a disclaimer would not.

Additionally, if OP is trying to gift $16K a year to brother to equalize a $100K difference, for example, that would take about 6 years. Maybe OP's brother doesn't live that long. Maybe OP doesn't live that long. Maybe OP's brother could use the money earlier. A disclaimer fixes all of these I think.

Anyway, we obviously might not agree on all this, and I'm not sure OP or anyone else is getting any value out of this discussion. So unless you or anyone else ask me a specific question, I'll let you have the last word on this thread.

 

[RunningBum]

If the OP wanted the money to go to the uncle, an easy workaround, as mentioned earlier, would be for the OP to accept the inheritance first, rather than disclaiming, and then gift it to the uncle.

That's easy, but if it's a large sum it would eat into your lifetime estate exemption limit. That may or may not be an issue for some. Will be an issue for more if that exemption is reduced as scheduled for 2026.

 

[RunningBum]

^ Again I am misread.

I appreciate your previous response to my question, and you were pretty clear with "in theory" and "in practice" disclaimers on your cases.