Trying to dispense an inheritace and a company is making it difficult. how can we resolve this?

Submitted by Jack_of_Spades t3_11dq01j in personalfinance

My grandfather passed away last summer. He left a sum of about 250k in his IRA through TD Ameritrade. My mother was the beneficiary in his will originally but we made an ammendment to that will with a lawyer. Essentially, my brother and I would each get 100k and my mom 50k. This was done so that the taxes would be reduced overall with each of us paying a portion instead of my mother taking all of the taxes and the higher tax rate for income taking a larger share of the inheritance.

We sent them the ammentment to the will, and so many pages of paperwork to set up beneficiary accounts. However, TD Ameritrade is saying they can only release the money directly to my mother because they have her listed as the beneficiary DESPITE my brother and I also having beneficiary accounts and paperwork sent in saying how much is meant to be sent to us from his old accounts.

Their estate department has insane hours that require us to take time off work anytime we need to talk to them. This seems... much harder than it needs to be. Can someone explain if there's a way we can argue this and get this split up the way it was intended?

If this is the wrong place, please direct me to the correct place!

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KReddit934 t1_jaa4o6j wrote

Not any kind of expert, but generally.... beneficiaries on IRA accounts are *separate* from the will. So any arrangements you made about the will would likely not to affect the distribution of the IRA. At least that is my understanding.

(The corollary to that is that a beneficiary of an IRA doesn't even need to be listed in the will and does not need to wait for probate in order to collect their money.)

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harrisc42 t1_jaa572g wrote

It is not uncommon for the listed beneficiary at the financial institution to supersede a Will.

You say that you set up beneficiary accounts, but did you actually update the named beneficiaries on your Grandfather's account before he passed?

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1955photo t1_jaa7g5y wrote

Exactly.

If your mother is named beneficiary nothing else matters. You went about this in the wrong way. Only your grandfather could have changed the beneficiary on his account.

The money will be moved to your mother's beneficiary account nowhere else. She has up to 10 years to withdraw all of it.

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Fish-Weekly t1_jaafri1 wrote

Yes - beneficiary designations on the account supersedes the will. One option you might have would be for your mother to disclaim $200k of the inheritance. That $200k would then be distributed per the will to you and your brother. The lawyer who drafted the will should be able to advise you as to whether this could be an option to accomplish what you are wanting.

I don’t fully understand the tax issues you were trying to avoid. Are you and your mom just thinking you would all just cash out the IRA and pay taxes on the full amount? That is typically not the best way to handle an inherited IRA. A better way is to have an inherited IRA account set up for each beneficiary and then take the minimum distribution every year. Your mom, being the surviving spouse especially, has many options to defer paying taxes on these funds. You and your brother would have to withdraw and pay taxes over a 10 year period per the Secure Act:

https://tickertape.tdameritrade.com/retirement/inherited-ira-secure-act-stretch-provision-16710

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1955photo t1_jaakf5u wrote

The beneficiary designation keeps the account out of the estate. It's not a process, like you can disclaim something in a will

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Fish-Weekly t1_jaancbd wrote

A beneficiary can disclaim all or part of an inherited IRA, allowing it to pass either to contingent beneficiaries or if none present, to the estate and then distributed per the will.

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1955photo t1_jaaok1f wrote

I was not aware of that. But Ameritrade is going to require some kind of legal document to handle it. It's possible there are no contingent beneficiaries and the will leaves everything to the person who was originally the beneficiary, and then the beneficiary will have to disclaim part of the estate. Seems a convoluted process for no real reason.

OP needs to get the facts about taxes on this account, which he seems to think must be paid in one year.

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Fish-Weekly t1_jaatodd wrote

It sounds like the will directs the money to be distributed as desired, but I agree with you that I don’t fully understand what the OP is trying to accomplish here from the taxation angle. Worst case, the surviving spouse can assume the IRA as their own and depending on age, let it continue to grow or take minimum RMDs for their lifetime.

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Levertki1 t1_jaa91d7 wrote

Iras and life insurance transfer as a matter of law. Meaning beneficiaries is all of it. Will would only come into effect if no beneficiary listed and went to estate.

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Greenappleflavor t1_jaak05v wrote

I hope you see this OP, while everyone is correct, there may be a way to get the $200k distributed to you and your brother (1, if you guys were the contingent beneficiaries or 2, you’re comfortable with it going to probate and using the update will to enforce (but the $/time cost may outweigh the tax benefit your grandda intended).

https://www.broadridgeadvisor.com/kt/HtmlNL.aspx?pvw=52C1D3C9CF34854F895148D8B529D8E229D5B0FDBC71B93A719295EDFA1355167185B41EAE6C088917D7ADA111912687FDD969FA3214C7355C736D7DF5070081E43963CC6D590DDFDA5D2DB7A90B48A49E2C5D09CCC26EB5BE0089A538AE5BE97860BBEA9E25D359CF28D4B0F4CDEFCA

But yes, beneficiary supersedes the will as everyone says.

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