When You Must Withdraw From an Inherited IRA

Many people are under a false impression that they do not need to make withdrawals from an IRA they have inherited until they would have to take withdrawals from an IRA they initiated. To avoid penalties it is important to understand the rules.

If you have an IRA of your own or you inherit one from your spouse, then you are not required to withdraw any money from it until you reach the age of 70 ½ . However, that is not the case if you inherit an IRA from anyone other than your spouse. Inheriting from someone else requires you to make withdrawals sooner or pay stiff penalties.

Recently, the News & Observer discussed the withdrawal rules in "Money Matters: Sibling seeks advice after inheriting brother's IRA."

Here are the basic rules:

·        

You must begin to take required minimum distributions the year after the IRA creator's death. This amount varies depending on the beneficiary's age. You can take more than the minimum amount, but everything withdrawn counts as income for income tax purposes. If you do not take the minimum amount, you will be assessed a 50% penalty and the amount you should have taken out will still count as income for tax purposes.

·         There is an exception to the above if the IRA creator passed away before the age of 70 ½. You do not have to take a required minimum distribution as long as you take all the money out of the IRA within five years.

·         If you make a mistake and do not take a distribution when you are required to do so, you can fix the error and apply to the IRS for a waiver of the penalties. As this can be complicated you should seek the advice of a professional.

There is no best option for everyone, so to get personalized advice for your own circumstances, call one of our Elder Law attorneys at 714-525-4600 for a confidential consultation, or visit our website at www.OCElderLaw.com for more information.

Reference: News & Observer (Feb. 27, 2016) "Money Matters: Sibling seeks advice after inheriting brother's IRA."

Fixing Backlog of Medicare Appeals Costly

The Congressional Budget Office estimates that a bill to fix the backlog in Medicare appeals could cost $1.7 billion.

The Audit & Appeals Fairness, Integrity, and Reforms in Medicare Act is a bipartisan effort in the Senate to help with the current backlog in processing and adjudicating Medicare appeals, which is currently 587 days. The situation is so severe that the United States Court of Appeals for the District of Columbia Circuit has ordered a review to determine if the Department of Health and Human 

Services should be required to stick to the normal 90 day deadline for administrative law judge appeals.

The Senate bill would require an online portal to be built so the status of claims could be monitored. 

It would also create an ombudsman position to help educate providers about the process and clear up any problems. Most importantly, the bill would create new magistrates with the power to decide smaller claims, which would free up administrative law judges to more quickly hear larger appeals.

As the bill is on the Senate’s legislative agenda for this year the Congressional Budget Office has issued a report on it and determined that implementation would cost $1.7 billion over the first 10 years.

McKnight’s reported this story in "Bill to expedite Medicare appeals expected to cost $1.7 billion."

Despite the high costs of this bill, it is important to do something about the current length of 

Medicare appeals. Providers need to know what services will be paid so they can best treat their patients and avoid practices that might lead to a denial of coverage.

If the Senate does decide that this proposal is too costly, it can only be hoped that they quickly come up with a better one.

For more information about Medicare Appeals in Orange County, please visit our website at www.OCElderLaw.com, or contact one of our Estate Planning Attorneys at 714-525-4600 for a confidential consultation.

Reference: McKnight’s (Feb. 18, 2016) "Bill to expedite Medicare appeals expected to cost $1.7 billion."

Bobbi Kristina Brown's Estate in another battle

Like her mother Whitney Houston's estate before her the estate of Bobbi Kristina Brown has sparked massive family fights. The latest battle has the estate administrator suing the trustees.

The battle over the estate of Bobbi Kristina Brown has featured plenty of drama. The family of her mother, Whitney Houston, is fighting with her father, Bobby Brown, over the estate left by Whitney. 

Yes, things can get complicated.

At one point it even included a boyfriend who claimed to have been secretly married to Bobbi Kristina. Now, there is a new development. The estate administrator has filed suit against the co-trustees of Bobbi Kristina's trust, Cissy and Pat Houston.

Radar reported on this story in "Bobbi Kristina Brown's Estate Sues Pat & Cissy Houston Over Unpaid Bills."

The trust is supposed to pay for the costs of administering the estate. However, according to the administrator, Cissy and Pat Houston will not pay any bills unless they consider the bills reasonable. 

The administrator claims that this has impeded the operation of the estate.

Given the contentious nature of the estate so far, it would be easy to quickly condemn the trustees for acting improperly. On the other hand, without knowing the exact nature of the bills the administrator submitted for payment it would be unwise to rush to judgment.

Trustees have an independent fiduciary duty not to waste the assets of the trust.

If the payments demanded by the administrator are unreasonable, then the trustees might have been right not to pay them. Before doing that it would have been best for the trustees to consult with an attorney.   It is not known whether they did this.

If you have questions about probate or trust administration in Orange County, please visit our website at www.OCElerLaw.com, or contact one of our estate planning attorneys at 714-525-4600.

Reference: Radar (Feb. 14, 2016) "Bobbi Kristina Brown's Estate Sues Pat & Cissy Houston Over Unpaid Bills."