Legal Question in Wills and Trusts in Georgia
Inherited IRA & Property Disclaiming in Georgia - My father recently passed away and left a written will appointing me as the estate executor. Since his death was recent and we don't yet have the death certificate from the county, I have yet to file the will in probate court, however believe the process will be relatively straight forward, because all the beneficiaries in the will are amicable and in agreement as to what what should happen.
My mother divorced my mother in 2011 and my father has not remarried, however he appears to have last updated his will in 2009.
Issue # 1:
My father owns two properties in two different counties in Georgia, house #1 and house # 2. In the divorce agreement, he indicated that he would make the payments on house # 1. (The house deed was never transferred out of my father's name) In the will, he also indicates that house #1 will be fully given to my mother. Even though they were divorced, they remained good friends, and my mother will receive more than enough money from an inherited IRA to pay off House #1 should she wish to do so.
In this will, he also indicates that my brother, myself, and his ex-wife (my mother) should each receive 1/3 of house # 2 . My fathers intentions had changed since the divorce and since that time, he indicated that my brother and I should split House #2 50/50.
My mother understood this intention, and has indicated that she is willing to disclaim any inheritance to house #2, which per my understanding, should essentially bring my brother's and I inheritance for house #2 to 50/50, as his only children. Is this essentially correct?
Issue #2
My father also has >$500,000 in invested assets across 2 brokerage accounts. His largest account by far is an IRA, and he also has a regular individual account with a small amount of stock and cash that he mostly used as a "go-between" account when transferring money from his IRA to his checking account when taking IRA distributions.
He went to his broker in December 2014 with the intention of changing the beneficiary distribution %'s of his IRA, individual account, and checking account from 50% (mother), 25%(brother), & 25%(myself) to 33.3%(mother), 33.3%(brother) & 33.3%(myself).
His broker of course knew that he only used the individual account mostly as a "go-between" account and that it had only a few thousand dollars in it, however the only paperwork that either myself or the brokerage firm could locate, was paperwork to change the beneficiary %s of the individual and checking account to 33.3% for each person. It appears that my father did not fill out the proper paperwork to change the distribution percentages of the IRA. (Which in my opinion is likely due to the carelessness of his broker)
Once again, because my mother understands what his actual intentions were, she is willing to disclaim 16.7% of the inherited IRA, so that my dad's wishes are fulfilled to split the IRA into 3 parts equally. She will still have plenty of money to pay off House #1.
My question is, when she disclaims the 16.7% of the inherited IRA, will half that percentage automatically be added to the 25% portion of the inherited IRA for both my brother and I? Essentially, my intention is to make sure that the my mother, my brother, and myself each receive 33.3% of an inherited IRA as my father intended. I don't want to have my mother simply cash out 16.7% of her portion of the IRA and gift it to us due to the tax consequences.
Thank You for your time!
1 Answer from Attorneys
You need to get a probate lawyer. You are seeking specific advice and it will be necessary to review the documents.
First, divorce decrees are not relevant in probate. Wills control so that is the language you look to first to see who gets what. Second, probate only concerns probate assets - things like IRAs, life insurance and other things are non-probate assets. You need, as executor, to start making a list of what your father owned and how it was titled and determining whether it is a probate asset or not.
Since your parents are divorced, I assume from your post that your father is the one who died and he did not remarry. The divorce terminated any of your mother's rights to inherit or administer the estate or receive yearly spousal support unless your father made a will indicating that your mother should receive something. However, if your father failed to change a beneficiary designation on an IRA or life insurance policy and stlll named your mother, divorce would not alter that.
Now to your questions. Assuming the homes are solely in your father's name, then they pass as per his will. The obligation to keep paying for house 1 ended at death. The beneficiary of house 1 will inherit the house subject to any existing mortgage. If the will states house 1 is devised to your mother, so be it. Whether she pays it off or sells it is up to her. You do not indicate when the divorce occurred - if it occurred before the will, then the house will go to her. If divorce occurred after the will, then there is a problem because the divorce would revoke any bequests. Again, you need to see a probate attorney for clarification.
As to house 2, I don't care if your father's intentions changed. That is why we have wills and codicils. Did he express those intentions in a written will or codicil? If not, then his expression is not valid. The exception would be if everyone agrees to this and is willing to sign a family settlement agreement or if your mother is willing to sign the disclaimer. Disclaimers. to be effective, must be done within 9 months of death and meet any state requirements. I cannot emphasize enough - see a lawyer to have the disclaimer drafted properly so it complies with state and federal law.
As to question 2, I discussed probate and non-probate assets. IRAs are non-probate assets. Y
our mother can disclaim but if there is no contingent beneficiary, then her share does not automatically go to you (unless the IRA beneficiary form says otherwise). It goes into your father's estate and this will become a nightmare as taxes will be owed on that. I strongly suggest you see a probate lawyer before mama disclaims. It might be better for mama to simply receive the money and pay the taxes owed and gift the money to you and your siblings. I am not a CPA or tax lawyer so you may need to consult these professionals too.
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