FAQ Friday: My wife had an IRA

At our FAQ Friday on March 19th, 2021, Mr. Berger discussed IRA’s. “I assume I am the beneficiary of the account. I sent a death certificate to the bank. The representative says I need "letters testamentary" to find more about the account.”

Summary:

Banks have their own rules. Letters testamentary can mean letters of administration. The personal representative needs to account for any assets.

The bank asks for the letters of administration. If you aren’t a beneficiary then it will go to the Estate. If you don’t do anything, the bank will cash in the IRA and the estate will have to pay tax on everything that passes to the estate.

If you are the beneficiary, you have other options. You can make it your own account and name your own beneficiaries. You can also make it an inherited IRA.

You can also half what you make your own and half what is inherited. Don’t be in a big hurry to get the money out and think of tax consequences long-term.

Ideally the account, number and beneficiary designations are easily found such as in the organized book we provide.

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