April 15th or technically April 17th due to the Patriots Day holiday is approaching and you may be considering making an Individual Retirement Account contribution for 2017 or 2018. IRAs offer a wide array of tax planning opportunities. Suppose that your spouse at her death has an IRA and you are the named beneficiary, but you don’t really need the IRA funds. These funds have built up tax-free over a number of years and you don’t want to incur the tax consequences, or perhaps you’d simply prefer to pass the funds on to your children or to someone else. Can you do so without incurring tax consequences or running afoul of the laws governing individual retirement accounts?
According to experts, the answer depends on whether you have already taken the money. Under M.G.L. ch.190B §2-801, the beneficiary to property or an estate can “disclaim” an inheritance, provided he or she has not actually taken possession of the inheritance. With an IRA, that would mean you could disclaim your interest in an IRA so long as you have not actually withdrawn any funds from the account.
So, how do you disclaim an inheritance? First, you must put it in writing. You should identify the asset of which you have been named the beneficiary, specifically state that you disclaim any right, title or interest to it in accordance with the law. The disclaimer must be filed within nine months of the date of death of the original asset owner. To ensure you properly disclaim the asset, it is highly recommended that you consult with an experienced attorney.
When you disclaim an inheritance, however, the law treats it as if you predeceased the owner. Accordingly, you don’t get to determine who now has right and title to the asset. That will be determined by who had a successor interest in the will or estate plan of the original asset owner.
Contact the Attorneys at the Baker Law Group Today to discuss any concerns about IRA beneficiaries or legal wills and trusts, contact our experienced Boston attorneys by e-mail or call us toll-free at 1-800-701-0352. We will help you understand your rights and obligations so that you can take the right steps to protect your assets in a tax-efficient plan.