I am the executor of my mother's estate. She has two IRAs that must pass through probate (the sole beneficiary of both accounts was my stepfather who predeceased her by 3 months this year and there are no secondary beneficiaries). These are very modest accounts (total under $100K) and the proceeds will eventually be distributed to me and my 5 siblings and stepsiblings in equal parts according to the will. The estate will incur significant income tax liability for cashing out these accounts (up to 37%), but it may deduct the distributions made according to the will in order to avoid income tax liability. My question is one of timing. Do I need to make the distributions to the heirs in the same tax year the estate receives the proceeds from IRA accounts? I'd like to cash out the IRA's this year to consolidate all cash assets but probably won't have permission Probate Court to make distributions to the heirs until next year. Thanks for any input.
