IRA Bypass Funding

[Guest DAW]

Realize if Bypass is properly setup and Custodian approves, an IRA can be funded by disclaimer to the Bypass. Several operational questions:

1. If the estate is such that the deceased individual really didn't have any IRA, but most of the estate is comprised of the surivivor's IRA, can the survivor transfer some of their IRA into Bypass to be able to fully fund? If that's allowable, would the RMD be based on the survivors life expectancy, or that of oldest beneficiary?

Does community property state versus separate property state laws have any impact?

2. Finally, if it is possible to do number 1 above, any problem with the survivor paying the taxes if she qualifies to convert some of her IRA into Roth, and then transferring the Roth to the Bypass to complete funding? Again, will the RMD be on her life expectancy or the beneficiaries? Does community property state versus separate property state laws have any impact?

Know this a lot to cover/answer, but I'm involved in a complicated settlement where the CPA is uncomfortable with the IRA and Bypass funding. This client has an estate of 4.5 million, and 3.4 million is the survivors IRA, and the house and other intangiables are 400K of the remaining 1.1 million.

[BPickerCPA]

Your question is somewhat confusing. An estate is an individual thing, generally. A survivor's IRA cannot fund a trust of a deceased individual. The I stands for Individual.

If you need to deal with an IRA in the context of a large estate, I suggest you engage the services of an IRA expert. There is apparently a lot at stake here. Make sure you get it right.