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Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29575
Experience:  Taxes, Immigration, Labor Relations
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I need help with a botched transfer of IRA money. My mother

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I need help with a botched transfer of IRA money. My mother passed away in April and had a small IRA with BofA for about $17K. There apparently was no designated beneficiary, so I used a Small Estate Affidavit to claim the money. I wanted BofA to write the check out to a Trust Distribution Account I had setup with a new EIN number, but they insisted on writing the check out to me. I deposited the check into the trust account.

My mother left a living trust and will which designates myself and two brothers as trustees and beneficiaries of her money in general. Now, since that IRA check was put in my name, I know that the $17K will now be counted as my income. But my plan all along was to distribute that amount via the Trust account to my middle brother who is in a lower tax bracket. Since we are both trustees, is there a way to remove that amount from my tax responsibility at this point? Thanks.


Hi and welcome to Just Answer!
The issue is that the trust is a separate legal entity and may not be named a beneficiary unless specifically named in the Will. So far - all assets owned by the decedent at the time of death are included into the estate.
Based on your information - you are an executor of your mother's estate - and received that income as a nominee. Because distribution is reported to you personally - you need to attach to your tax return a letter with explanations - that you are acting as the executor of your mother's estate - and provide the tax ID of the estate. Then - you will include that distribution into the income tax return of the estate - and attach a copy of 1099R (because it is issued with a different tax ID).


There is another issue - because your mother had a living trust - as the executor of your mother's estate - you may make an Election To Treat a Qualified Revocable Trust as Part of an Estate.
Here is the form -
In this case - you will file a combined income tax return for the trust and for the estate - and will not need to file two separate tax returns.
If you do so - on the tax return - form 1041 - - you need to check the box in the header - "G Check here if the estate or filing trust made a section 645 election"

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