Stretching inherited IRAs can be particularly advantageous to families. But sometimes, financial and legal advisors screw up the paperwork so badly that the IRA is disqualified. Tax preparers familiar with such snafus have some advice to avoid the more common problems. Keep IRAs out of trusts because withdrawals can’t be stretched over time. Heirs should retitle the account, but be sure the paperwork is in the proper format. Let beneficiaries know they can get a tax deduction for the estate tax paid on the IRA’s value even if someone else paid the tax. Many heirs don’t realize they can disclaim an inherited IRA and pass it to their children. Paperwork for this must be completed within nine months of the benefactor’s death.
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