![]() ![]() What is this from? What happens to it at her death?Īnswer: Her benefit is probably a spousal benefit, which is based on your work record. My wife did not work long enough to get a benefit, yet she receives a small amount each month. Social Security spousal benefitsĭear Liz: I qualified for Social Security and receive a benefit. “IRAs are very difficult in probate situations, and it’s better to name individuals to be beneficiaries directly on those accounts in almost all situations,” said Jennifer Sawday, an estate planning attorney in Long Beach. In other words, choosing “ease” now can create a lot of discomfort later for your heirs. The account also could be more vulnerable to creditors, depending on state law, and could be subject to the delays and costs of probate. If you die after starting required minimum distributions, the remaining distributions would be made according to the single life expectancy tables for someone your age, Luscombe said. Designating individuals as IRA beneficiaries rather than the estate would allow them to spread the distributions over 10 years rather than five years. 31 of the fifth year following the year of your death, said Mark Luscombe, principal analyst for Wolters Kluwer Tax & Accounting. If these individuals don’t directly inherit the IRA, and instead it must first filter through my estate, do the payouts occur immediately and therefore create a greater tax burden that cannot be spread out for as many years?Īnswer: If you die before starting to take required minimum distributions and the estate is your beneficiary, the IRA assets must be completely distributed by Dec. However, from a tax perspective, is this unwise? In your recent response you state that non-spouse beneficiaries typically have up to 10 years to drain an inherited IRA. I’ve always listed the beneficiary of the account as my estate, for no reason other than administrative ease (if I ever change my will, the IRA will follow along). I am 53, divorced with no children, and have an IRA worth more than $1 million. Dear Liz: After reading your recent response on the taxability of inherited IRAs, I have a question.
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