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IRA money in your will
Old 11-17-2021, 04:21 PM   #1
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IRA money in your will

Most of my cash is an IRA. When I bequeth money to my relatives in my will, is it going to be difficult or complicated for the executore to distribute it?
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Old 11-17-2021, 04:29 PM   #2
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Most of my cash is an IRA. When I bequeth money to my relatives in my will, is it going to be difficult or complicated for the executore to distribute it?
Nope. (Of course "difficult or complicated" are relative terms!) An estate planning attorney can word your will appropriately and splitting an IRA to go to more than one person can be done.
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Old 11-17-2021, 04:29 PM   #3
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IMO, it is better to designate beneficiaries to your IRA. That way there is no chance it will go through probate.
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Old 11-17-2021, 04:38 PM   #4
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IMO, it is better to designate beneficiaries to your IRA. That way there is no chance it will go through probate.
What he said. That will greatly simplify things for everyone involved.
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Old 11-17-2021, 04:42 PM   #5
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IMO, it is better to designate beneficiaries to your IRA. That way there is no chance it will go through probate.
I'll buy into that. I only answered as I did since OP asked if it would be tough on the executor if his will split things up. But, yes, split it up via the named beneficiary route.
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Old 11-17-2021, 04:42 PM   #6
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You should definitely designate beneficiaries. Otherwise it goes through probate, and will take longer to distribute to who's in your will. And I think your beneficiaries have longer to deplete the inherited IRA, though I'm not sure with the IRA beneficiary change a couple years ago. Finally, your beneficiary shouldn't even have to deal with it, or at most needs to report the death to your IRA holding company, whereas without a beneficiary then they do have to deal with distributing it.
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Old 11-17-2021, 04:49 PM   #7
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Add me to the "designate beneficiaries" chorus. 401ks and IRAs will likely be the majority of our assets, it is just easier to designate beneficiaries and be done with it.
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Old 11-17-2021, 04:51 PM   #8
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Definitely designate the beneficiaries to your IRA account, unless your choices are complicated like leaving $x to the local animal shelter and setting up a trust for your grandkids or..... or..... as stated before. Beneficiaries on financial accounts bypass probate and could help to attain small estate status.
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Old 11-17-2021, 04:53 PM   #9
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Itís also easy to change designated beneficiaries at the custodian if you want to do that. No lawyers needed.
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Old 11-17-2021, 04:54 PM   #10
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We just went through this with Dad's estate. His IRA was at Fidelity, to be split among us 5 siblings. Dad died on October 19. My share showed up in the Inherited IRA account I created on 11/11. It helps that my brother who handled it all is a CPA (specializing in taxes) and there were no disagreements over this split whatsoever. My brother said that it would take longer if anyone had an issue with it but, as he promised the Fidelity guy, there was no drama.
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Old 11-17-2021, 05:20 PM   #11
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I recently became aware of a situation where there may be an exception to where having named beneficiaries on an IRA can be a complication.

Pennsylvania has a significant inheritance tax. And the money in an IRA is included in what is taxed. I plan on leaving my estate to 10 nieces and nephews. Their part of the inheritance will be taxed at 15% by the state. The executor is responsible for paying that tax from the estate as part of an inheritance tax return paid to the county I live (and will die in).

If the IRA is the bulk of the estate, and the beneficiaries get paid their chunk directly from my broker (Vanguard in my case), then the executor has to chase after 9 cousins to get the money back to pay the 15% tax. I don’t think Vanguard is set up to do this and to pay it to the executor so he/she can submit it to the county. I could be wrong.

In my case, I’m leaving the named beneficiaries on the IRA because I have a larger taxable account that can be used to pay the tax. I previously had the same beneficiaries on that account, but removed them when I became aware of the details of our state’s lovely inheritance tax.

Not many states have this tax (or one this high) but something to consider.
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Old 11-17-2021, 05:25 PM   #12
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Another for the beneficiary designation. Simple, and easy to change if needed.

Everything we can put into TOD/POD/beneficiary has been done. We only have one DS, so not a lot of thought into how to distribute.
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Old 11-17-2021, 06:21 PM   #13
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I believe that the beneficiaries will each have to open "Inherited IRA" account with a custodian. I had to when I inherited my mom's Roth. Probably the easiest is to open them with the house that now holds the IRA(s). Withdrawal rules have recently changed, so be sure that the beneficiaries understand the new rules.
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Old 11-17-2021, 06:31 PM   #14
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IMO, it is better to designate beneficiaries to your IRA. That way there is no chance it will go through probate.
That's what I've done with my IRA and 401K. Bank accounts I've just used POD...No need for probate with beneficiaries and POD's in place, just need a death certificate. They may need to roll things like IRA's and 401k's to their own "named" accounts but that's pretty simple too. Or take the cash, but that could be a heavy tax hit if done in one year. (Rules do change so stay up with it.)
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Old 11-17-2021, 08:04 PM   #15
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What he said. That will greatly simplify things for everyone involved.
and what he said.
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Old 11-17-2021, 09:37 PM   #16
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I believe that the beneficiaries will each have to open "Inherited IRA" account with a custodian. I had to when I inherited my mom's Roth. Probably the easiest is to open them with the house that now holds the IRA(s). Withdrawal rules have recently changed, so be sure that the beneficiaries understand the new rules.
DW is currently having to deal with this very thing. She had to open an inherited IRA account with the house that held the account. in her case 2 different custodians since there were 2 (actually 3) IRAs. Don't ask! Only then could DW move the 2 inherited IRAs to Fidelity into her own Inherited IRA account. A lot of paperwork for no real reason.
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Old 11-17-2021, 09:53 PM   #17
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I believe that the beneficiaries will each have to open "Inherited IRA" account with a custodian. I had to when I inherited my mom's Roth. Probably the easiest is to open them with the house that now holds the IRA(s). Withdrawal rules have recently changed, so be sure that the beneficiaries understand the new rules.
The investment house will require inherited IRAs be opened at the same house. Afterward, each beneficiary can transfer the inherited IRA to their favorite investment house.

This is for ease of administration but they also want you to keep the assets there.
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Old 11-18-2021, 05:51 AM   #18
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Most of my cash is an IRA. When I bequeth money to my relatives in my will, is it going to be difficult or complicated for the executore to distribute it?
Designate the beneficiaries directly in your IRA and it bypasses the will. Give the executor a break.
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Old 11-18-2021, 05:52 AM   #19
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DW is currently having to deal with this very thing. She had to open an inherited IRA account with the house that held the account. in her case 2 different custodians since there were 2 (actually 3) IRAs. Don't ask! Only then could DW move the 2 inherited IRAs to Fidelity into her own Inherited IRA account. A lot of paperwork for no real reason.
Pretty standard practice by the investment companies/banks.
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Old 11-18-2021, 05:55 AM   #20
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Another for the beneficiary designation. Simple, and easy to change if needed.

Everything we can put into TOD/POD/beneficiary has been done. We only have one DS, so not a lot of thought into how to distribute.
I set this up for DF (no IRA) and that part was distributed fairly quickly with no work on my part other than notification and sending a death certificate copy. Beneficiaries had to do the follow up.

The real property however, has been a royal pain.
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