3 Strategies to Consider When Sole Beneficiaries Want to Share the Wealth
Unfortunately, no single solution is simple, cheap, and tax-advantaged, says Natalie Choate.
I hear this story a few times each year: Uncle (or grandparent, sibling, or parent) died leaving his IRA to one named niece (or grandchild, sibling, or child). But everyone, including the named beneficiary, agrees--the decedent should have named all members of the class as equal beneficiaries. After all, he left all his other assets equally to all the class members. Surely he meant for all of them to share the IRA equally too, right? Can't we just ignore this mistake and pay out the IRA to everybody?
Unfortunately, what seems like an easy fix has to clear several hurdles, including the IRA administrator's policies, income tax consequences, transfer tax consequences, and the terms of the decedent's will.