Many people put off the process of taking their required minimum distributions until closer to the end of the year. This is particularly problematic, however, if the party who is required to take those minimum distributions, passes away if the beneficiaries have a small period in which to take the year of death required minimum distributions.

If a person who owns an IRA, who is required to take required minimum distributions, passes away before the distribution was removed for the year must be taken by the beneficiary, the beneficiary is then responsible for taking the RMD total that the former IRA owner would have had to take were they still alive. There is sometimes not enough time to get this accomplished when the IRA owner passes away later in the year. An inherited IRA typically should be set up and the beneficiaries must use the RMD by year end. This is unlikely to be done if the person who owned the IRA, passed away at the end of November or December.

This can add a layer of complexity and delays based on the advanced planning the person had in place. If the IRA beneficiary was a trust, for example, this can add further complications. Sometimes beneficiaries are also hesitant to take action without consulting their own advisors about the issues. It is important to engage with an experienced estate planning attorney in these situations.

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