Can I shield my IRA funds from estate tax?

Related Ads
Need Professional Help? Talk to a Lawyer
Enter Your Zip Code to Connect with a Lawyer Serving Your Area
searchbox small

Question:

I am 75 years old and I am concerned that when I die my estate will have to pay income and estate taxes on my IRA. If I put my IRA into an annuity and receive annual payments, will that remove the IRA from my taxable estate?

Answer:

There is no way to get your IRA out of your estate except by taking the assets out of the IRA, paying income tax, and giving the money away before you die.

Your IRA is subject to estate tax when you die and your beneficiaries will have to pay income tax as the assets are distributed from the IRA.

But there is also an offsetting deduction for the estate tax that the beneficiaries can take on their personal returns. The estate tax and the offsetting deduction would not quite be a wash, but your beneficiaries would not be hit with a double tax, either.

Get Informed
Empower yourself with our plain-English information
Do It Yourself
Handle routine tasks with our products
Find a Lawyer
Connect with a local lawyer who meets your needs
The fastest, easiest way to find, choose, and connect to estate planning lawyers
LA-NOLO2:LDR.1.5.0.20140409.25642