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<div style="font-family:Calibri,sans-serif; font-size:11pt">I was thinking along the same lines, although splitting the IRA is the safer approach in my opinion.<br>
Withdrawing the IRA assets and distributing the cash to the lower income beneficiary might accomplish what you are trying to do. You would need to confirm that the IRA withdrawal results in DNI. You may be able to do it all in one year if the estate has minimal
income otherwise. <br>
This plan creates a problem however. This plan is only fair to the income beneficiary if his after tax share is equivalent to the others' pre-tax shares. How do you determine an appropriate adjustment? What if his marginal tax rate is higher (or lower) than
expected? Can the PR even consider the income tax liability when dividing the estate?
<br>
<br>
John Creahan<br>
Cairn Law, PLLC<br>
206-621-5848<br>
Sent from my phone</div>
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<span style="font-family:Calibri,sans-serif; font-size:11pt; font-weight:bold">From:
</span><span style="font-family:Calibri,sans-serif; font-size:11pt"><a href="mailto:markthiggins@gmail.com">Mark Higgins</a></span><br>
<span style="font-family:Calibri,sans-serif; font-size:11pt; font-weight:bold">Sent:
</span><span style="font-family:Calibri,sans-serif; font-size:11pt">4/2/2015 5:22 PM</span><br>
<span style="font-family:Calibri,sans-serif; font-size:11pt; font-weight:bold">To:
</span><span style="font-family:Calibri,sans-serif; font-size:11pt"><a href="mailto:wsbapt@lists.wsbarppt.com">WSBA Probate & Trust Listserv</a></span><br>
<span style="font-family:Calibri,sans-serif; font-size:11pt; font-weight:bold">Subject:
</span><span style="font-family:Calibri,sans-serif; font-size:11pt">Re: [WSBAPT] Non pro rata allocation of taxable income to beneficiaries</span><br>
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<div class="gmail_default" style="font-size:large">Eric-I don't think your desired selective allocation is allowed. Have you thought about making a distribution of the IRA dollars out to just the one beneficiary this year, and then distributing out the others'
shares next year? Since estate income in 2015 follows the distributions in 2015 on the K-1s you might have succeeded in putting the IRA income on just the one beneficiary. You'd want to double check with a cpa whether this would work.</div>
<div class="gmail_default" style="font-size:large"><br>
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<div class="gmail_default" style="font-size:large">Mark</div>
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<div class="gmail_quote">On Thu, Apr 2, 2015 at 5:04 PM, Eric Nelsen <span dir="ltr">
<<a href="mailto:Eric@sayrelawoffices.com" target="_blank">Eric@sayrelawoffices.com</a>></span> wrote:<br>
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<p class="MsoNormal"><span style="color:rgb(31,73,125)">Marcus--Thanks, I have never heard of this--I'm definitely glad to hear it.<u></u><u></u></span></p>
<p class="MsoNormal"><span style="color:rgb(31,73,125)"><u></u> <u></u></span></p>
<p class="MsoNormal"><span style="color:rgb(31,73,125)">In this case, though, the heirs are okay with getting the cash; we're just trying to minimize the tax hit by selectively allocating the income pass-through to low-income beneficiaries. Any thoughts on
whether that's allowed?<u></u><u></u></span></p>
<p class="MsoNormal"><span style="color:rgb(31,73,125)"><u></u> <u></u></span></p>
<p class="MsoNormal"><span style="color:rgb(31,73,125); font-size:12pt">Sincerely,<u></u><u></u></span></p>
<p class="MsoNormal"><span style="color:rgb(31,73,125); font-size:12pt"><u></u> <u></u></span></p>
<p class="MsoNormal"><span style="color:rgb(31,73,125); font-size:12pt">Eric<u></u><u></u></span></p>
<span>
<p class="MsoNormal"><span style="color:rgb(31,73,125); font-size:12pt"><u></u> <u></u></span></p>
<p class="MsoNormal"><span style="color:rgb(31,73,125); font-size:12pt">Eric C. Nelsen<u></u><u></u></span></p>
<p class="MsoNormal"><span style="color:rgb(31,73,125); font-size:12pt">SAYRE LAW OFFICES, PLLC<u></u><u></u></span></p>
<p class="MsoNormal"><span style="color:rgb(31,73,125); font-size:12pt">1320 University St<u></u><u></u></span></p>
<p class="MsoNormal"><span style="color:rgb(31,73,125); font-size:12pt">Seattle WA 98101-2837<u></u><u></u></span></p>
<p class="MsoNormal"><span style="color:rgb(31,73,125); font-size:12pt">phone <a href="tel:206-625-0092" target="_blank" value="+12066250092">
206-625-0092</a><u></u><u></u></span></p>
<p class="MsoNormal"><span style="color:rgb(31,73,125); font-size:12pt">fax <a href="tel:206-625-9040" target="_blank" value="+12066259040">
206-625-9040</a><u></u><u></u></span></p>
<p class="MsoNormal"><span style="color:rgb(31,73,125)"><u></u> <u></u></span></p>
<p class="MsoNormal"><span style="color:rgb(31,73,125)"><u></u> <u></u></span></p>
<p class="MsoNormal"><span style="color:rgb(31,73,125)"><u></u> <u></u></span></p>
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<div style="border-width:1pt medium medium; border-style:solid none none; border-color:rgb(181,196,223) currentColor currentColor; padding:3pt 0in 0in">
<p class="MsoNormal"><b><span style="font-family:"Tahoma","sans-serif"; font-size:10pt">From:</span></b><span style="font-family:"Tahoma","sans-serif"; font-size:10pt">
<a href="mailto:wsbapt-bounces@lists.wsbarppt.com" target="_blank">wsbapt-bounces@lists.wsbarppt.com</a> [mailto:<a href="mailto:wsbapt-bounces@lists.wsbarppt.com" target="_blank">wsbapt-bounces@lists.wsbarppt.com</a>]
<b>On Behalf Of </b>Marcus Fry<br>
<b>Sent:</b> Thursday, April 02, 2015 4:28 PM<br>
<b>To:</b> 'WSBA Probate & Trust Listserv'<br>
<b>Subject:</b> Re: [WSBAPT] Non pro rata allocation of taxable income to beneficiaries<u></u><u></u></span></p>
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<div class="h5">
<p class="MsoNormal"><u></u> <u></u></p>
<p class="MsoNormal"><a name="14c7c9d5aec272e2__GoBack"></a><span style="color:rgb(31,73,125)">Eric:<u></u><u></u></span></p>
<p class="MsoNormal"><span style="color:rgb(31,73,125)">I disagree about “no rollover options.” First, it’s technically not a rollover, as rollovers are only for spouses. However, many financial institutions permit the PR to instruct the establishment of
inherited IRAs in each beneficiary’s name. Natalie Choate’s website list some good companies.</span>
<span style="color:rgb(31,73,125)"><a href="http://www.ataxplan.com/bulletinboard/ira_providers.cfm" target="_blank">http://www.ataxplan.com/bulletinboard/ira_providers.cfm</a>
<u></u><u></u></span></p>
<p class="MsoNormal"><span style="color:rgb(31,73,125)"><u></u> <u></u></span></p>
<p class="MsoNormal"><span style="color:rgb(31,73,125)">I suggest moving the IRA to another institution as suggested by Choate if the one you are at will not cooperate.<u></u><u></u></span></p>
<p class="MsoNormal"><span style="color:rgb(31,73,125)"><u></u> <u></u></span></p>
<div>
<p class="MsoNormal" style="text-align:justify"><span style="color:rgb(31,73,125); font-family:"Courier New"; font-size:10pt">Marcus J. Fry<u></u><u></u></span></p>
<p class="MsoNormal"><span style="color:rgb(31,73,125); font-family:"Courier New"; font-size:10pt">Lyon, Weigand & Gustafson, P.S.</span><span style="color:rgb(31,73,125); font-family:"Times New Roman","serif"; font-size:12pt">
<br>
</span><span style="color:rgb(31,73,125); font-family:"Courier New"; font-size:10pt">Adoption Attorney*<u></u><u></u></span></p>
<p class="MsoNormal"><span style="color:rgb(31,73,125); font-family:"Courier New"; font-size:10pt">P.O. Box 1689</span><span style="color:rgb(31,73,125); font-family:"Times New Roman","serif"; font-size:12pt">
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</span><span style="color:rgb(31,73,125); font-family:"Courier New"; font-size:10pt">Yakima, Washington 98907</span><span style="color:rgb(31,73,125); font-family:"Times New Roman","serif"; font-size:12pt">
<br>
</span><span style="color:rgb(31,73,125); font-family:"Courier New"; font-size:10pt">Telephone:
<a href="tel:%28509%29%20248-7220" target="_blank" value="+15092487220">(509) 248-7220</a></span><span style="color:rgb(31,73,125); font-family:"Times New Roman","serif"; font-size:12pt">
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</span><span style="color:rgb(31,73,125); font-family:"Courier New"; font-size:10pt">Facsimile:
<a href="tel:%28509%29%20575-1883" target="_blank" value="+15095751883">(509) 575-1883</a></span><span style="color:rgb(31,73,125); font-family:"Times New Roman","serif"; font-size:12pt">
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<p class="MsoNormal" style="text-align:justify"><b><u><span style="color:rgb(31,73,125); font-family:"Arial","sans-serif"; font-size:9pt">NOTICES:<u></u><u></u></span></u></b></p>
<p class="MsoNormal" style="text-align:justify"><span style="color:rgb(31,73,125); font-family:"Arial","sans-serif"; font-size:9pt"> *Adoption Attorney reflects election as a Fellow of the American Academy of Adoption Attorneys, an invitation based organization
of 300+ attorneys nationwide, under its criteria of experience, ethics and peer recommendation. Washington's Supreme Court has not yet developed or recognized a credentialing process for specialties, and certification/fellowship is not required to practice
law in this state.<u></u><u></u></span></p>
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<p class="MsoNormal"><span style="color:rgb(31,73,125)"><u></u> <u></u></span></p>
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<div style="border-width:1pt medium medium; border-style:solid none none; border-color:rgb(181,196,223) currentColor currentColor; padding:3pt 0in 0in">
<p class="MsoNormal"><b><span style="font-family:"Tahoma","sans-serif"; font-size:10pt">From:</span></b><span style="font-family:"Tahoma","sans-serif"; font-size:10pt">
<a href="mailto:wsbapt-bounces@lists.wsbarppt.com" target="_blank">wsbapt-bounces@lists.wsbarppt.com</a> [<a href="mailto:wsbapt-bounces@lists.wsbarppt.com" target="_blank">mailto:wsbapt-bounces@lists.wsbarppt.com</a>]
<b>On Behalf Of </b>Eric Nelsen<br>
<b>Sent:</b> Thursday, April 02, 2015 3:57 PM<br>
<b>To:</b> WSBA Probate & Trust listserve (<a href="mailto:wsbapt@lists.wsbarppt.com" target="_blank">wsbapt@lists.wsbarppt.com</a>)<br>
<b>Subject:</b> [WSBAPT] Non pro rata allocation of taxable income to beneficiaries<u></u><u></u></span></p>
</div>
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<p class="MsoNormal"><u></u> <u></u></p>
<p class="MsoNormal">Estate has four equal beneficiaries. Decedent had an IRA that paid directly to Estate, so no rollover options.<u></u><u></u></p>
<p class="MsoNormal"><u></u> <u></u></p>
<p class="MsoNormal">One of the beneficiaries is in a very low tax bracket, and all four beneficiaries agree that they'd like all the tax liability for the IRA allocated to that one beneficiary. (There's enough other cash in the estate to allow complete distribution
of the IRA to one and make compensatory distributions to the other three of untaxed inheritance dollars.)<u></u><u></u></p>
<p class="MsoNormal"><u></u> <u></u></p>
<p class="MsoNormal">Is that allowed? So the Estate would do a tax return and issue K-1s, allocating all income liability to one out of the four beneficiaries, and none to the other three?<u></u><u></u></p>
<p class="MsoNormal"><u></u> <u></u></p>
<p class="MsoNormal">Any idea where I would look for the governing rule? IRS Code or Regs I would guess, but not sure where...<u></u><u></u></p>
<p class="MsoNormal"><u></u> <u></u></p>
<p class="MsoNormal"><span style="font-size:12pt">Sincerely,<u></u><u></u></span></p>
<p class="MsoNormal"><span style="font-size:12pt"><u></u> <u></u></span></p>
<p class="MsoNormal"><span style="font-size:12pt">Eric C. Nelsen<u></u><u></u></span></p>
<p class="MsoNormal"><span style="font-size:12pt">SAYRE LAW OFFICES, PLLC<u></u><u></u></span></p>
<p class="MsoNormal"><span style="font-size:12pt">1320 University St<u></u><u></u></span></p>
<p class="MsoNormal"><span style="font-size:12pt">Seattle WA 98101-2837<u></u><u></u></span></p>
<p class="MsoNormal"><span style="font-size:12pt">phone <a href="tel:206-625-0092" target="_blank" value="+12066250092">
206-625-0092</a><u></u><u></u></span></p>
<p class="MsoNormal"><span style="font-size:12pt">fax <a href="tel:206-625-9040" target="_blank" value="+12066259040">
206-625-9040</a><u></u><u></u></span></p>
<p class="MsoNormal"><u></u> <u></u></p>
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-- <br>
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<div>Mark T. Higgins<br>
Mark T. Higgins, P.C.</div>
<div>P.O. Box 57<br>
Darrington, WA 98241<br>
206-491-2420</div>
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