Q: How do you maintain tax deferred status of pension check made out to an estate if recipients are minors?
minor children will be recipients of a lump sum pension check that will have tax deferred status, I think. Assuming the father will receive and control this money, (pension money is from divorced, deceased mother of minor children) I, as the representative will be transferring the money over. If I run it through the estate account, taxes will be due in that tax year instead of being able to keep it deferred for whatever time period is allowed. I know it can be cashed in the estate account and redeposited within 60 days without the penalties and such, but can it be transferred by staying sheltered somehow? Would the check be made out from the estate account to the father and stipulated that it is for the children?
The tax status of 'pensions' is defined by law, and with the exception of surviving spouses, you cannot defer the taxes for long. If a NATURAL PERSON is named as a beneficiary, there is a possibility of extending the tax 'window' but minimum distributions are required each year, and you will need to insure the taxes are paid on those distributions.
If an estate, non-qualified trust or other non-natural person is the 'beneficiary' then the taxes are due upon distribution in most cases. You need to consult with a local accountant or tax attorney to review the facts of your situation to get real advice though. This is a very complicated area of law and any 'off the cuff' responses will likely be incorrect!
Seek that local tax attorney advice!
-- This answer is offered for informational purposes only and does not constitute legal advice or create an attorney/client relationship.
I am licensed to practice in Michigan only. Please seek competent local legal help if you feel you need legal advice
Justia Ask a Lawyer is a forum for consumers to get answers to basic legal questions. Any information sent through Justia Ask a Lawyer is not secure and is done so on a non-confidential basis only.
The use of this website to ask questions or receive answers does not create an attorney–client relationship between you and Justia, or between you and any attorney who receives your information or responds to your questions, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask a Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.
Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.