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<DIV>Be sure that you receive the payment and distribute it <STRONG>in the same tax year</STRONG> for the estate.</DIV>
<DIV>So pay attention to your tax year on the estate, and, of course, you can do a fiscal year if needed and the estate has not already chosen a tax year.</DIV>
<DIV>Then you just have the pass through of the DNI to the heirs and no tax consequences on the estate income tax return.</DIV>
<DIV>Thus, I would not have any withholding to the Estate, just complicates trying to pass that withholding through to the heirs.</DIV>
<DIV>Instead, give the money to the heirs, tell them they will need to pay income tax on it and will get a K-1 from the Estate and suggest they put 20% away to pay the taxes and talk to their accountants for a better estimate. </DIV></DIV></DIV>
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<DIV><FONT size=3 face=Arial>Jackie Cyphers</FONT></DIV>
<DIV><FONT size=3 face=Arial>Jeannette A. Cyphers, Attorney at Law</FONT></DIV>
<DIV><FONT size=3 face=Arial>P. O. Box 908 </FONT></DIV>
<DIV><FONT size=3 face=Arial>Edmonds, WA 98020-0908</FONT></DIV>
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<DIV id=IncrediOriginalMessage style="FONT-SIZE: 11pt" dir=ltr><I>-------Original Message-------</I></DIV>
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<DIV style="FONT-SIZE: 11pt" dir=ltr><I><B>From:</B></I> <A href="mailto:Eric@sayrelawoffices.com">Eric Nelsen</A></DIV>
<DIV style="FONT-SIZE: 11pt" dir=ltr><I><B>Date:</B></I> 2/26/2015 4:21:08 PM</DIV>
<DIV style="FONT-SIZE: 11pt" dir=ltr><I><B>To:</B></I> <A href="mailto:wsbapt@lists.wsbarppt.com">WSBA Probate & Trust listserve (wsbapt@lists.wsbarppt.com)</A></DIV>
<DIV style="FONT-SIZE: 11pt" dir=ltr><I><B>Subject:</B></I> [WSBAPT] Mandatory withholding on tax deferred account paid toEstate</DIV></DIV>
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<P class=MsoNormal>Decedent has a tax-deferred account of about $35,000 that has no named beneficiary and will be paid to Estate. I honestly can't remember the last time I had this problem, if I ever have. The Estate will distribute pretty quickly to the five heirs ($7,000 each), who of course will have to take the money as income and pay income taxes. <O:P></O:P></P>
<P class=MsoNormal><O:P> </O:P></P>
<P class=MsoNormal>Should we opt to allow the 20% withholding from the payment to the Estate, or tell the custodian to send the Estate the entire amount, no withholding, and let the beneficiaries deal with it? Are there significant pros and cons to both options?<O:P></O:P></P>
<P class=MsoNormal><O:P> </O:P></P>
<P class=MsoNormal><SPAN style="FONT-SIZE: 12pt">Sincerely,<O:P></O:P></SPAN></P>
<P class=MsoNormal><SPAN style="FONT-SIZE: 12pt"><O:P> </O:P></SPAN></P>
<P class=MsoNormal><SPAN style="FONT-SIZE: 12pt">Eric<O:P></O:P></SPAN></P>
<P class=MsoNormal><SPAN style="FONT-SIZE: 12pt"><O:P> </O:P></SPAN></P>
<P class=MsoNormal><SPAN style="FONT-SIZE: 12pt">Eric C. Nelsen<O:P></O:P></SPAN></P>
<P class=MsoNormal><SPAN style="FONT-SIZE: 12pt">SAYRE LAW OFFICES, PLLC<O:P></O:P></SPAN></P>
<P class=MsoNormal><SPAN style="FONT-SIZE: 12pt">1320 University St<O:P></O:P></SPAN></P>
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<P class=MsoNormal><SPAN style="FONT-SIZE: 12pt">phone 206-625-0092<O:P></O:P></SPAN></P>
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