Discalimer of Fractional IRA Proceeds

[Guest StanJacobson]

California Probate Code Secs. 260-295 allows a beneficiary to disclaim a fractional IRA distribution. Can the owner of an IRA leave a 100% interest to her husband with the proviso that to the extent Husband disclaims any portion of the IRA distribution, such disclaimed portion shall go to the Family "by-pass" Trust. Again, the amount to go into the Family Trust is determined solely by Husband, NOT IRA owner.

[Guest PVICKERS]

I see no reason under IRS regs that a partial disclaimer would not be allowed. The key point is that the disclaimant mey be determining how much goes to the trust, but he has no say over where it goes. That is the critical point in the eyes of the IRS - the disclaimant may not control the destination of the money.

[Guest datalife]

I know that I'm a little late, but a quick question. Why would anyone disclaim IRA assets. Do they not become taxable with any estate tax plus income tax due immediately? I can reason that if the estate is below the credit threshold, however, it still does not appear to make sense. If you have a minute, please drop me a note. Thanks.

[Guest PVICKERS]

I see a number of reasons to disclaim. A spouse may well disclaim to get the assets to a child, so that distributions may be spread over a longer period, thus increasing tax deferral. Alternately, if the disclaimant is in a higher tax bracket than the default recipient, it could be tax intelligent to disclaim. I am sure there are others - if you wish more please contact me email pvickers@allmerica.com