I am the executor of an estate, there was no beneficiary listed at death so it sits in the name of the estate. The decedent was not of RMD age and passed away in 2020. My sibling and I are the only two heirs in the Will. I haven't been able to get a clear answer on the following:
1) How long do we have to distribute the IRA?
2) Is a distribution from this account income to the estate?
3) Do we have the option to split the account into two Inherited IRAs in mine and my sibling's name?
The IRA distribution is to the estate and you have 5 years to get the whole amount out of there. The estate files a 1041 and the two of you get K-1s for the distributions from the estate. You don't have to take amounts equally over 5 years but there can't be anything left after 5 years.
Critter-3's answer is incorrect. Numerous Private Letter Rulings have invariably permitted this. You generally should trustee-to-trustee transfer the inherited IRA into separate inherited IRAs for the benefit of each of you, otherwise the estate will need to remain open to receive the required distributions that deplete the entire inherited IRA by the end of the 5th year following the year of death. Such transfers will also allow each of you to manage the investments and distributions of your individual shares independently. However, many custodians try to resist doing such transfers. The only reason that such transfers would be prohibited is if the custodian's IRA agreement stipulates that such transfers are not permitted and that distributions can only be made to the decedent's estate. If transferred to separate accounts, the 5-year rule still applies since the estate was the beneficiary. Distributions from these separate accounts would be paid to the individual beneficiaries, not to the estate.
What you can't do and what Critter-3 might have been thinking is that you cannot transfer the account to ones owned by you and your sibling, only to inherited IRAs for your benefit, nor can the inherited IRA be moved by distribution and rollover. (The decedent is still the owner/participant of the inherited IRA, it's just now maintained for the benefit of the beneficiary.)
Unless the amount is small, it's usually (but not always) a good idea to spread the distributions over the maximum number of years to avoid spiking your income in any one year and having the distribution taxed at a higher marginal tax rate than it might otherwise would. If the amount is small, it's probably better to just have the entire IRA distributed to the estate and have the estate distribute the income to the beneficiaries of the estate and be done with it.