I Need Some Inheritance Advice

[Warstud]

Are you the executor?

I am a beneficiary and a trustee

 

[99Saturn]

You are correct about paying taxes on Inherited Traditional IRA, luckily it was only $110K. I should have clarified that part.

Pablo is correct that an Inherited Traditional IRA needs be drawn down (take yearly distributions) over 10 year timeframe. It would be foolish to take a lump sum distribution and pay taxes on entire $110K in a single year.

Seems like a good plug for a Roth IRA though I suppose there may be other reasons to go with a traditional.

 

[Warstud]

Don't understand the question. If YOU got an inheritance, why do you have to split YOUR inheritance with anybody. The person that died must already have specified how much and to whom the money goes to.


Are we talking multi-millions, or in the six figures. If the latter, just put the money in the bank for a safe and healthy 5%. Don't need any professional to tell you that. They are mostly vultures that want to sell you investments to make commissions.

Not that easy . There's certain ways of avoiding taxes and probate .

Example : Beneficiary Information . Check one
1) Beneficiary
2) Trustee
3) Executor

 

[JustTrynaHelp]

Went through this. Attorney that specializes in trusts and wills.

In many cases an inheritance is not taxable, but check with said attorney and your tax pro.

 

[Warstud]

Not that easy . There's certain ways of avoiding taxes and probate .

Example : Beneficiary Information . Check one
1) Beneficiary
2) Trustee
3) Executor

Which one is the best ?

 

[Lubener]

I believe a beneficiary can outright receive an inheritance. Trustee manages a trust. Executors manage wills. Executors and trustees don't always receive an inheritance but manage and direct items to individuals per the deceased person's instructions.A transfer on death document has the most authority and can avoid probate for "titled" property, automobiles bank accounts, 401k's,Roth's, etc. Titled property without a TOD designation will have to go through probate. A will has the least authority behind it compared to other estate documents.

I am not an attorney but have stayed at a Holiday Inn Express before..

 

[wpod]

how ever the procedure ends up don't waste your part doing byn something foolish.. {Said in the dad voice.}

 

[Dave Hess]

Which one is the best ?

Seek advice from attorney.

Laws vary from state to state and you want to do everything correctly the first time.

 

[Pablo]

Advice: Never wait or depend on inheritance. From inside or outside, no good ever comes from this.

 

[zzyzzx]

We would need to know (in vague terms) how much money is involved to better determine suggestions.
I.E. - I would not advise a financial advisor unless your portion of the after tax proceeds was going to exceed a certain amount. And even then I'd probably advise some sort of index fund or fixed income type of thing depending on your needs / goals before I'd suggest a professional.

 

[ecotourist]

.... I'd probably advise some sort of index fund or fixed income type of thing depending on your needs / goals before I'd suggest a professional.

A recent story in the Globe and Mail compared one of Canada's better run retirement funds (with a huge staff) to a simple lazy man's portfolio of index ETFs. At times the retirement fund did a bit better but for the most part the lazy man's portfolio was just as good. Since I can't afford a huge staff of professionals I'll stick with index ETFs.

I also have a few blue chip dividend stocks, Berkshire of course, and a few highly regarded low MER mutual funds that I've owned for many years. Their performance is pretty good and they all have huge capital gains attached. I don't feel like paying tax on those gains in order to convert them to index ETFs.

 

[andrew_j]

Don't understand the question. If YOU got an inheritance, why do you have to split YOUR inheritance with anybody. The person that died must already have specified how much and to whom the money goes to.


Are we talking multi-millions, or in the six figures. If the latter, just put the money in the bank for a safe and healthy 5%. Don't need any professional to tell you that. They are mostly vultures that want to sell you investments to make commissions.

I handed $50k age 21 to a “vulture” who sold me investments with commissions and won’t say what it grew to in retirement and another non retirement fund. I paid dearly for it in accident settlement but had no business with that money 30 years ago.

It would have been a shame to leave it in bank for 5%…..

 

[atikovi]

It would have been a shame to leave it in bank for 5%…..

Really? That $50K would be $330,000 after 30 years.

 

[bullwinkle]

I just went through this with my mom’s estate-her inherited IRA has to be distributed to the heirs (my brother & I) in 10 years-BUT-if one is close to retirement, the entire amount could be distributed AFTER retirement. Which would save a LOT on taxes if the heir is still working.

 

[ecotourist]

Really? That $50K would be $330,000 after 30 years.

At a 6% compound rate $50,000 after 30 years would become $287,000
At 7% it would be $380,000
At 8% it would be $503,000

Those numbers are all in the range of possible. That's a demonstration of the power of compounding.

 

[Warstud]

I just went through this with my mom’s estate-her inherited IRA has to be distributed to the heirs (my brother & I) in 10 years-BUT-if one is close to retirement, the entire amount could be distributed AFTER retirement. Which would save a LOT on taxes if the heir is still working.

So you split the IRA in 1/2 and paid taxes on the gains like ordinary income ?
How about her house ?

 

[Pablo]

So you split the IRA in 1/2 and paid taxes on the gains like ordinary income ?
How about her house ?

Not sure exactly what you are asking - BUT a lot of this depends on if they had a trust, etc for the house and basis.

BUT if they took cash on the IRA split or not, it would not be on the gains. It would be on the entire amount withdrawn and as ordinary income. That's why it would be lunacy to do such a thing. IHMO.

 

[Warstud]

Not sure exactly what you are asking - BUT a lot of this depends on if they had a trust, etc for the house and basis.

BUT if they took cash on the IRA split or not, it would not be on the gains. It would be on the entire amount withdrawn and as ordinary income. That's why it would be lunacy to do such a thing. IHMO.

You got it right ...... what about Annuities (non - ira ) and Life Insurance ?
Also there is no inheritance tax in my state . What dont I have to pay tax on ?

 

[Pablo]

You got it right ...... what about Annuities (non - ira ) and Life Insurance ?
Also there is no inheritance tax in my state . What dont I have to pay tax on ?

I actually don't know about annuities and clearly admit that.

Life insurance typically not taxed.

 

[Warstud]

Bump