Originally Posted by bob boag
My father-in-law died a few weeks ago. He and my Mother-in law:
- Live in Los Angeles county
- have a $1.1M home; no mortgage
- have a taxable $400K account in a Living Trust; mostly stocks/stock funds
- He had a $100K IRA
- She has a $100K IRA
- He was 88; she is 84
- They have three kids in their 50s.
This month we want to transfer the assets of the taxable account to perhaps Wellington/Wellesley/Target Retirement Fund, so she can take the capital gains hit while she can still file Married Filing Jointly.
- Transferring to one of the above 3 funds will trigger the capital gains hit, right?
- She can do a peer-to-peer transfer of his IRA to hers without a tax hit, right?
- Anything else obvious that we should think about? Selling the house in 2017 is not an option
Thank you my brothers and sisters of leisure.
My condolences to you and your family.
2. Yes, assuming she was married to him when he died and that she is the sole and primary beneficiary, she can just roll it into her IRA (there are other options, but I think rolling it over is the most common). As for RMD's:
a. She should already be doing RMD's on her IRA balance.
b. Her RMD for next year should be based on her 12/31 balance coming up in a few weeks.
c. He was obligated to take his RMD this year, I assume he already did so. If he didn't, then she would have to take his RMD this year as well.
d. For 2019, her RMD will be bigger because it will include his IRA balance as well. It should be based on her age, like always.
3. Several ideas:
a. If she has enough cash flow to live on, consider prepaying charitable contributions, property taxes, and income taxes before December 31, because the deductability of these items next year is in question.
b. Consider not moving the taxable stuff and just keeping it, as long as it matches her risk tolerance and she understands what she's invested in (or you do, if you're helping out). Selling it a little bit as needed for income will probably produce a lower tax hit overall.
She'll lose his Social Security and maybe part of his pension, and tax-wise she'll lose his personal exemption next year (may go away anyway with the new tax bill) and will be in the more aggressive single bracket. First priority in my opinion is to make sure she has enough to live on after all of those adjustments are made.