Except in cases where it's necessary for an estate or trust retain income and resulting in the estate paying income taxes, NEVER have the custodian withhold taxes on an IRA distribution paid to an estate or trust! Decline such withholding when an estate or trust is a beneficiary. The credit for tax withholding cannot be passed through on a Schedule K-1. If you have the custodian withhold taxes you'll have to keep the estate open an extra year to be able to receive the refund, distribute the refund to the estate beneficiaries and file another Form 1041 with Schedules K-1.
As Critter said, even if you had the custodian withhold taxes, $35K would likely be way too high since you will be passing the income through to the estate beneficiaries to be taxed on the beneficiaries' tax returns at their individual marginal tax rates. Default tax withholding on an IRA distribution is 10% but you have the option to have either 0% withheld or more than 10% withheld.
