Paying the creditors of the estate takes precedence over making distributions to the estate beneficiaries. Certainly any portion of the IRA inherited by you mother's estate, which is apparently the default beneficiary, that is needed to pay off creditors of the estate cannot be distributed to estate beneficiaries. I imagine that the estate would also be responsible for paying the income taxes on any amount distributed to the estate from the IRA to pay the creditors and the income taxes, so the minimum amount needed to be distributed from the IRA to the estate is likely to be larger than just the amount needed to pay the creditors other than the tax authorities. The amount used to pay the creditors and the income taxes would not be available to pass through to the estate beneficiaries as Distributable Net Income, so it appears that this portion would be taxed at estate income tax rates.
