INHERITED IRA with no beneficiary and no will

[LYNN_10]

 I am the administrator for my brother's estate.  He has a 91K IRA that has been rolled over to an estate account by the investment company.  My brother did not have a beneficiary listed and died before he could sign his will.  His intention, per the unsigned will, was for the money to go to his grandchildren when they turn 25.  However, since he did not sign the will, I cannot just withdraw it and set up something for his three grandkids.  He has two adult sons so, per probate, the money would have to go to them.  Won't it?  My nephews (brother's two adult sons) don't seem to have a problem with the money being set up for their kids, however, I don't know the most tax beneficial way to do this.  If I just hand the money over to my nephews, I am afraid they won't honor my brother's wishes.  Can someone give me some advice on what to do?  Any help would be greatly appreciated.  Thank you.

[BobKamman]

You’ve come to an Intuit site supporting tax professionals, and you may be looking for support as an individual taxpayer. What you're really looking for, though, is legal advice.  This is not the place to ask for that.  

 

[IRonMaN]

"Can someone give me some advice on what to do?"

Sounds like a phone call to an attorney would be in order rather than taking legal advice from a random tax preparer on the internet.

[LYNN_10]

• Ok.  Thank you.

[LYNN_10]

Thank you. 

[qbteachmt]

You seem to be lost on the internet.

You’ve come to a Peer User community for Intuit Income Tax Preparation products supporting tax preparation professionals using ProSeries, Proconnect and Lacerte Tax Preparation programs (specific software users).

Intuit does maintain a support community with a forum. You may be looking for support as an individual taxpayer. Please visit the TurboTax Help site for support.

And try this screen, for the various topics (subforums): https://ttlc.intuit.com/community/discussions/discussion/03/302

Your sign in user info here is the same one you can use over at the TurboTax forum.

Thanks.

[LYNN_10]

Very lost!  LOL!!! I was desperate, but I think I finally got things worked out.  My actual probate attorney did not know what to do.  She sent me to a CPA who also did not know what to do. I was shocked at the lack of knowledge on this by professionals.  Anyway, thanks so much for everyone's guidance.  I really appreciate it. 

[Accountant-Man]

Probate attorneys should know this, but they often (usually?) are not knowledgeable enough about the income tax aspects.

Many CPAs do not work on estate/trust income taxes.

Since there were no beneficiaries on the IRA, the estate gets the money and all would be taxable in the year of death/distribution. The money is not "rolled over" to the estate account; it is distributed and taxable.

Estates pay income tax at higher rates than individuals, and 100% would be taxable to the estate rather than split amongst beneficiaries. If you can get most of the money distributed before the fiscal year end of the estate, you can pass this income through to the beneficiaries instead of taxing it to the estate, but the estate must be terminated.

[BobKamman]

---

@Accountant-Man wrote:

Since there were no beneficiaries on the IRA, the estate gets the money and all would be taxable in the year of death/distribution. The money is not "rolled over" to the estate account; it is distributed and taxable.

---

An estate can own an inherited IRA, but the account has to be set up that way.  Maybe it was, or maybe a "financial planner" just set up a nonretirement account for the IRA proceeds.  In any case, most probate attorneys know about disclaimers.  That's not really a tax question, unless you're concerned with avoiding gift-tax implications.