It's important to check beneficiary designations so no errors are made.
Q. I am the beneficiary of my brother’s IRA. All of his assets were supposed to be split between me and my other brother according to a living trust. Schwab says the IRA only has one beneficiary — me. How can I spilt this equally? Can I sell half and give him the money? What would happen with taxes and the cost basis?It’s also an important reminder why we should all check our beneficiary designations to make sure they reflect our wishes.
You would essentially be making a gift to your brother from the IRA account that you inherited, said Shirley Whitenack, an estate planning attorney with Schenck, Price, Smith & King in Florham Park. In order to give your brother half of the assets in the IRA, you will have to liquidate a portion of the account andfor amount he is gifting above the $16,000 annual exclusion amount,” she said. “However, no gift tax should be due presuming the reader has less than $12.06 million in his estate and lifetime gifts made above the annual exclusion amounts.”
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