[WSBAPT] IRA Payable to Estate - PR"s authority to distribute in kind or cash and distribute cash (with K-1)

[Joshua McKarcher]

Unless the IRA is sizable, and there is some way to avoid the outcome provided by the decedent (inadvertently or otherwise), the PR is probably "right on" - at least as of the last time I dealt with this a few years ago (knock wood).

I'm not sure the PR can direct the IRA custodian to just create a bunch of smaller "inherited IRAs" AFTER it falls to the estate. But admittedly lots has changed in the prior 3 years, so I don't want you to take that to the bank.

But especially if the IRA is not huge, if you can achieve complete distribution and pass-through taxation via K-1s, then that is sometimes just the best you can do. Just make darn sure you're timing things correctly and with financial advisor, CPA who will do estate return and send K-1s, and alert beneficiaries of the coming K-1.

Hope that helps! Best, Josh

From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of Jeff at bellanddavispllc.com
Sent: Thursday, October 27, 2022 1:44 PM
To: 'WSBA Probate & Trust Listserv' <wsbapt at lists.wsbarppt.com>
Subject: [WSBAPT] IRA Payable to Estate - PR"s authority to distribute in kind or cash and distribute cash (with K-1)

Listmates:

IRA has no POD beneficiaries, so it becomes an estate asset.  Many residuary beneficiaries who take in varying percentages.  Administratively, the Personal Representative prefers to liquidate the IRA and distribute the cash (per the %) and each beneficiary would receive a K-1.  Does the PR have the right to liquidate the IRA, rather than offering the beneficiaries the option of taking their % in kind?  Does the PR have to consider the income tax consequences of each beneficiary?

Your thoughts and/or experiences.

Jeff Davis

W. Jeff Davis
BELL & DAVIS PLLC
Attorneys at Law
P.O. Box 510
720 E. Washington Street, Suite 105
Sequim WA 98382
Phone: (360) 683.1129
Fax: (360) 683.1258
email: jeff at bellanddavispllc.com<mailto:jeff at bellanddavispllc.com>
www.bellanddavispllc.com<http://www.bellanddavispllc.com/>

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