If you are keeping an inheritance separate from marital funds, how do you handle inherited IRA

[Anonymous]

Anonymous wrote:

Anonymous wrote:Why "thanks Trump"? This money has never been taxed, it's always the law that pre-tax funds get taxed when withdrawn, has nothing to do with who is president.

The SECURE Act of 2019 put a ten year time limit on withdrawing from inherited IRAs. Before that law, you could stretch the withdrawals out more. This hurts people who inherit money when they are younger and are still working.

Correct. I inherited an IRA in 2015 and I have until my 70s to withdraw the money. This is a Trump rule. He wants everyone else’s money.

[Anonymous]

Anonymous wrote:

Anonymous wrote:As long as the money goes into an account in your name it’s not commingled. You just pay the taxes on it as income filing jointly - that doesn’t make it a joint asset.

You probably will have to pay taxes quarterly though, or check with the broker holding the account about having them withhold enough given your family income. Don’t forget state taxes too, if those apply.

You may want to consult with a tax accountant and get some assistance.

This is not fair to her husband he shouldn’t have to pay taxes on it since he doesn’t get or benefit from the money.

OP, keep it separate and contribute from the separate account the difference in the taxes it causes.

+1 Your accountant can figure this out for you. I’m a PP who inherited an IRA from my dad. He and my stepmother kept everything separate but filed as married jointly because it was cheaper and their accountant figured out who owed what and why.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I haven't read all the replies, but will add this: as the spouse who didn't get a large trust fund and does not benefit at all from my husband's, I was furious when I found out he was paying the taxes he owed on his trust fund from our shared account--to which I was contributing more from my salary, while he wasn't even working. You wealth-inheriting spouses who don't share the wealth are the worst. You don't sound like a great spouse, honestly.

My DH also inherited about $3M in trusts in an IRA. He takes the distribution he needs to and dumps into a brokerage account in his name only after taking out enough for taxes into our joint account. I don’t really think about it all. We treat it as “our” money that he gets the final word on. To my knowledge, he hasn’t used any of those funds so far but he has said that he intends to use for grad school, weddings and down payment on a first house for our children.

It makes total sense to me that in the event that we divorce, he gets to keep the money and spend how he wishes. I hope on our kids but that will be his choice. I think that is what his parents intended and I think he will try to do what they would want.

My kids are extremely fortunate as their 529s are fully funded already and so all this is “extra”.

If he divorces from you and remarries, your kids will likely nothing from him. Statistically speaking.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I haven't read all the replies, but will add this: as the spouse who didn't get a large trust fund and does not benefit at all from my husband's, I was furious when I found out he was paying the taxes he owed on his trust fund from our shared account--to which I was contributing more from my salary, while he wasn't even working. You wealth-inheriting spouses who don't share the wealth are the worst. You don't sound like a great spouse, honestly.

My DH also inherited about $3M in trusts in an IRA. He takes the distribution he needs to and dumps into a brokerage account in his name only after taking out enough for taxes into our joint account. I don’t really think about it all. We treat it as “our” money that he gets the final word on. To my knowledge, he hasn’t used any of those funds so far but he has said that he intends to use for grad school, weddings and down payment on a first house for our children.

It makes total sense to me that in the event that we divorce, he gets to keep the money and spend how he wishes. I hope on our kids but that will be his choice. I think that is what his parents intended and I think he will try to do what they would want.

My kids are extremely fortunate as their 529s are fully funded already and so all this is “extra”.

If he divorces from you and remarries, your kids will likely nothing from him. Statistically speaking.

As I said, it’s all extra. Their needs and most of their wants through college have been taken care of. If they inherit nothing from their father, they are still better off than most. The much bigger shock and impact would come from the breakup of their family which I hope does not ever happen.

[Anonymous]

Anonymous wrote:I haven't read all the replies, but will add this: as the spouse who didn't get a large trust fund and does not benefit at all from my husband's, I was furious when I found out he was paying the taxes he owed on his trust fund from our shared account--to which I was contributing more from my salary, while he wasn't even working. You wealth-inheriting spouses who don't share the wealth are the worst. You don't sound like a great spouse, honestly.

+1 unless the spouse is a total train wreck, this is awful

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I haven't read all the replies, but will add this: as the spouse who didn't get a large trust fund and does not benefit at all from my husband's, I was furious when I found out he was paying the taxes he owed on his trust fund from our shared account--to which I was contributing more from my salary, while he wasn't even working. You wealth-inheriting spouses who don't share the wealth are the worst. You don't sound like a great spouse, honestly.

My DH also inherited about $3M in trusts in an IRA. He takes the distribution he needs to and dumps into a brokerage account in his name only after taking out enough for taxes into our joint account. I don’t really think about it all. We treat it as “our” money that he gets the final word on. To my knowledge, he hasn’t used any of those funds so far but he has said that he intends to use for grad school, weddings and down payment on a first house for our children.

It makes total sense to me that in the event that we divorce, he gets to keep the money and spend how he wishes. I hope on our kids but that will be his choice. I think that is what his parents intended and I think he will try to do what they would want.

My kids are extremely fortunate as their 529s are fully funded already and so all this is “extra”.

If he divorces from you and remarries, your kids will likely nothing from him. Statistically speaking.

Yeah, this is awful. Different strokes for different folks, but I could not stay married to someone who routinely put money into a separate account with even a hint that it wouldn’t go to our family. It’s legal but it’s not right.

[Anonymous]

My much more modest required inherited IRA distributions get reinvested in a taxable stock fund as we don't need the money.

Talk with your attorney/tax advisor about how to title the account so that it is in either your name or a trust for your children to keep it separately.