One of the biggest estate administration mistakes that people make after someone passes away, concerns something that is not technically part of the estate at all. It has to do with inherited IRAs.
Because these accounts are given to beneficiaries directly and they do not go through probate, they are not part of the estate.
However, the importance of IRAs to overall inheritances can be enormous. Therefore, it is vital that their administration be carefully considered.
If you are the person named as the IRA beneficiary, you have some decisions to make, as the Wills, Trusts & Estates Prof Blog discusses in "Practical Issues When an IRA Owner Dies."
The biggest thing to understand is that there are tax consequences for any decisions made about what to do with the IRA. Those consequences are not the same for everyone.
They depend on the relationship between the beneficiary and the deceased. These tax consequences are big enough, that it is important to seek professional tax advice and to do so quickly.
There are penalties, if decisions are not made within certain time limits.
If you are not certain who to talk to about what to do with an inherited IRA, then talk to the Cincinnati attorney who is assisting with the administration of the estate.
The attorney can help direct you to a professional who can assist.
Remember: “An ounce of prevention is worth a pound of cure.” When making your estate plans or when probating an estate or administering a trust, do not go it alone. Be sure to engage a Cincinnati estate planning attorney.
For more information about estate planning, probate or trust administration in Cincinnati (and throughout the rest of Southwest Ohio) and to review free resources regarding estate planning, probate or trust administration, visit my website. If you have questions regarding this article or a particular legal matter, feel free to contact me at 513-399-PLAN (7526).
Reference: Wills, Trusts & Estates Prof Blog (Oct. 4, 2017) "Practical Issues When an IRA Owner Dies."