Distribution Rules for Inherited Roth IRA’s when the Estate is the Beneficiary

11 Tuesday Dec 2018

Posted by Robert Dowling in Beneficiaries

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5-Year Rule, Beneficiary, Common Estate, Designated Beneficiary, Distributions, estate, Executor, Financial Institutions, Inherited Roth IRA, Inherited Traditional IRA, IRA Agreement, IRS, IRS Guidelines, IRS Publication 590-B, Lump-Sum Distribution, Non-Spouse Beneficiaries, Penalties, probate, Qualified Distributions, Required Beginning Date, Required Minimum Distributions, Retirement Accounts, Roth IRA, Roth IRA Owner, Tax, Tax-Free

When the estate is the beneficiary of an inherited Roth IRA, the executor must handle the distribution of the account. How the executor handles the distribution process depends on IRS regulations. Essentially, the IRS requires distribution of the account using rules based on the age of the IRA owner at death. Aside from the age based rules, other regulations that apply to the inherited Roth IRA provide the IRA with diverse characteristics. Accordingly, the executor must understand these rules to handle the account competently. Particularly,when the estate is the beneficiary of an inherited Roth IRA.

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Suspicious Beneficiaries and the Appearance of Legal Bias in an Estate

18 Monday Jun 2018

Posted by Robert Dowling in Beneficiaries

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Attorney, Beneficiaries, Beneficiary Rights, Common Estates, Communication, estate, Estate Administration, Executor, Executor Rights, Final Accounting, Legal Bias, probate, Suspicious Beneficiaries, Will

In common estates, suspect executor behavior will create suspicious beneficiaries. Although the beneficiary may view the executor behavior as suspect, the behavior may not be suspect at all. As described in the article Executor Rights to an Estate, the executor has rights granted by the probate court in which most beneficiaries are unaware. Furthermore, if the executor ignores the beneficiaries, the beneficiaries may become suspicious of the executor’s activities. In common estates, this type of miscommunication usually leads to costly conflicts.

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The Need to Properly List Beneficiaries on a Life Insurance Policy

23 Monday Apr 2018

Posted by Robert Dowling in Beneficiaries

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Alternate Beneficiaries, Beneficiaries, Beneficiary, Community Property, Community Property States, Custodian, Deceased Beneficiary, Descendants, estate, Government Assistance, Guardian, Inherit, Inheritance, Life Insurance Policy, Minor Children, Per Capita, Per Stirpes, Policy Owner, Shared Funds, Special Needs, Special Needs Benefciairy, Special Needs Trust, Supplemental Trust, Trust, Trustee, Uniform Transfer to Minors Act, Unintended Consequences, Will

Typically, people who need to provide for others after death will purchase a life insurance policy. Although there are many types of life insurance policies, the common thread between them are beneficiary designations. In simple terms, once the policy owner perishes, the listed beneficiary will receive the proceeds from the policy. However, listing beneficiaries on a life insurance policy needs careful attention for reasons mentioned in the article List Your Beneficiaries Wisely in Your Estate Plan. Otherwise, after death, unintended consequences may occur. So, to avoid unintended consequences, properly listing beneficiaries on a life insurance policy is essential.

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Why List Beneficiaries in Your Will?

06 Monday Nov 2017

Posted by Robert Dowling in Beneficiaries

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Beneficiaries, Common Estate, Designated Beneficiaries, Estate Income Taxes, Estate Plan, Guardian, Heirlooms, Living Trust, Personal Property, probate, Residuary Beneficiary, Residuary Clause, Residuary Estate, Will

Although avoiding probate is preferable in common estates, there is still a need to list beneficiaries in your will. As mentioned in the article Tips to Avoid Probate in your Estate Plan, not all states allow designated beneficiaries for certain types of property; therefore, certain types of property must pass through a will to a listed beneficiary. Furthermore, there is the need to plan for your residuary estate regardless of your estate planning strategy. Nevertheless, whether your will serves as a backup will to a living trust or serves as the centerpiece in your estate plan, there are significant reasons to list beneficiaries in your will.

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Grandchildren Inheriting Savings Bonds for Education

08 Sunday Oct 2017

Posted by Robert Dowling in Beneficiaries

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529 College Savings Investment Account, Beneficiaries, Common Executors, Distribute Savings Bonds, Education Tax Exclusion, estate, Executor, Financial Professionals, higher education, Inherited Savings Bonds, Interest Income, Medallion Signature Guarantee, Payable on Death, Redeem Savings Bonds, Reissuing Savings Bonds, Savings Bond Registration, Savings Bonds, Series EE Savings Bonds, Series I Savings Bonds, Tax Liability, Tax Professional, TreasuryDirect, TreasuryDirect Account, Will

Presently, many grandchildren find themselves inheriting savings bonds left for them by deceased grandparents. Although savings bonds can be problematic when it comes to inheritance, inheriting savings bonds for education can be helpful. In fact, with a correct registration, the savings bonds may qualify for the education tax exclusion. According to TreasuryDirect the following must apply, in part, to qualify for the education tax exclusion:

When using bonds for your child’s education, the bonds must be registered in your name and/or your spouse’s name. Your child can be listed as a beneficiary on the bond, but not as a co-owner.

Ultimately, the registration for the savings bonds must be in a parent’s name to qualify for the education tax exclusion. Unfortunately, many grandparents mistakenly register the savings bonds in their own name while designating the grandchild as the beneficiary. Consequently, complications arise when applying for the education tax exclusion after redeeming the savings bonds.

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Designating Beneficiaries Using Per Stirpes or Per Capita

02 Monday Oct 2017

Posted by Robert Dowling in Beneficiaries

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Alternate Beneficiary, Assets, Beneficiaries, Descendants, Designated Beneficiaries, Designating Beneficiaries, Distribution, Estate Plan, Per Capita, Per Stirpes, Primary Beneficiary, Residuary Beneficiary, Will

In your estate plan, properly designating beneficiaries is equally important as choosing your beneficiaries. As inferred in the article Considerations for Choosing Your Beneficiaries, choosing additional beneficiaries to designate as alternate beneficiaries in the event a primary beneficiary predeceases you would help in avoiding unintended consequences. However, there are two additional beneficiary designations available to consider in such a situation: per stirpes and per capita.

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Considerations for Choosing Your Beneficiaries

25 Monday Sep 2017

Posted by Robert Dowling in Beneficiaries

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Alternate Beneficiary, Assets, Beneficiaries, Designated Beneficiaries, Divorce, estate, Estate Plan, Estate Size, Life Circumstances, Marital Status, Married With Children, Primary Beneficiary, Residuary Beneficiaries, Single Never Married, Unintended Consequences, Will

Another important step in building your estate plan is choosing your beneficiaries. As mentioned in the article How Estate Size Will Influence Your Estate Plan, the estate size will influence the size of your beneficiary pool. Accordingly, along with estate size, here are a few more basic considerations for choosing your beneficiaries:

Consider your marital status.
Designated beneficiaries on assets.
Using additional types of beneficiaries along with the primary beneficiary.

Although there are many intricate considerations concerning beneficiaries, these basic considerations are more typical of a common estate.

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Two Reasons Why a Beneficiary May Become Belligerent

11 Monday Sep 2017

Posted by Robert Dowling in Beneficiaries

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Abatement, Abatement Process, Ademption, Ademption by Extinction, Belligerent Beneficiary, Beneficiary, bequest, Claims, Common Estates, Contest The Will, Doctrine of Ademption, estate, Estate Assets, Executor, Expenses, Identity Theory, Probate Avoidance Strategy, Taxes, Threaten Lawsuit, Will

There are many reasons a beneficiary may become belligerent. However, according to the article How to Handle a Belligerent Beneficiary, one way a beneficiary acts out towards an estate is to exercise their right to contest the will or threaten a lawsuit. Moreover, there are two legitimate reasons why a beneficiary may exercise such a right: abatement or ademption.

Unfortunately, the executor must inform each beneficiary named in the will that they are part of the estate. If the beneficiary understands the bequest they may receive, the beneficiary will expect that bequest at some point. So, if abatement or ademption affected a bequest, the intended beneficiary may become belligerent. As a result, the belligerent beneficiary may contest the will or sue the estate.

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Communicating with Beneficiaries: Executors Should Use Common Sense

03 Monday Apr 2017

Posted by Robert Dowling in Beneficiaries

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Assent Forms, Beneficiaries, Beneficiary Rights, Common Estates, Communicating, Communicating with Beneficiaries, Details of the Estate, estate, Executor Rights, Final Accounting, Poll Beneficiaries, Polls, Reading of the Will, Sharing Details of the Estate, Will

When communicating with beneficiaries, executors should use common sense. To have a smooth administration the executor should communicate regularly with the beneficiaries as revealed in the article Communicating with the Beneficiaries is Essential for the Executor. However, when it comes to sharing details of the estate, the executor should use common sense. Otherwise, sharing too many details with the beneficiaries may cause confusion and turmoil in the estate.

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When is the Right Time to Confront a Belligerent Beneficiary?

13 Monday Mar 2017

Posted by Robert Dowling in Beneficiaries

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Administration Plan, Asset Settlement Phase, Belligerent Beneficiary, Beneficiary Rights, Confrontation, Confrontation Between Executor And Beneficiary, Consequence, Contest The Will, estate, Estate Administration, Executor, Handling A Belligerent Beneficiary, Major Phase Of An Estate, personal possessions, Will

Having to confront a belligerent beneficiary is an awful position for an executor. Unfortunately for executors, beneficiaries have rights to an estate that executors must respect. As a result, an executor must try to handle a belligerent beneficiary as described in the article How to Handle a Belligerent Beneficiary. Conversely, if all efforts fail to appease the belligerent beneficiary, an executor may have to take action to move the estate forward.

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The Common Executor

~ A Journey into Estate Administration

Category Archives: Beneficiaries

Distribution Rules for Inherited Roth IRA’s when the Estate is the Beneficiary

Suspicious Beneficiaries and the Appearance of Legal Bias in an Estate

The Need to Properly List Beneficiaries on a Life Insurance Policy

Why List Beneficiaries in Your Will?

Grandchildren Inheriting Savings Bonds for Education

Designating Beneficiaries Using Per Stirpes or Per Capita

Considerations for Choosing Your Beneficiaries

Two Reasons Why a Beneficiary May Become Belligerent

When is the Right Time to Confront a Belligerent Beneficiary?