Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Monday, June 11, 2012

Avoiding Letting Clients End Up In This Place

InheritedSome may debate the existence of a literal Heaven or Hell, but one thing is for sure -- some large IRA owners are dying and leaving their heirs in a place known as "Inherited IRA Hell." An accountant and lawyer have partnered as consultants to handle cases that end up there at death. Most heirs, post mortem, pleasantly find salvation and exemption when professional review is obtained. But others, cash their checks and find it is too late! The decedent's bad advisors, (sadly including attorneys and CPA's that aren't up on the subject), along with commission driven money advisors green light lump sum distributions, or write family trusts that can not legally hold IRA funds due to their failure to qualify under strict IRS rules. Some create legal fictions that force the trust to terminate after the estate is settled, when in fact, continuation under perpetuity is needed when large IRA funds list the trust as the primary beneficiary.

The firm's website educates all advisors. It was recently promoted by a #1 IRA tax and legal expert in her spring newsletter, mainly because website publishes actual cases that have  gone horribly wrong. With the chance these large IRA accounts can soon be hit up for expensive federal estate death taxes and liens as early as January 1, 2013 -- things most likely will heat up on this subject.

See Sheyna Steiner, 8 Ways To Go Wrong With An Inherited IRA, Bankrate.com, April 9, 2012.

Special thanks to M.D. Anderson (www.InheritedIRAHell.com) for bringing this article to my attention.


Estate Planning - Generally, Non-Probate Assets | Permalink

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