Inevitable

Death and taxes are the only certainty in our mortal lives. We all know that...I would add dust to the list, it's always there again and again. Alas, returning to the subject of today's musing, death should be the end of taxes. NOPE, not necessarily. Ol' Abner's uncle died last fall. He was the executor of the estate. Previous discussions with living Uncle and review of the will left them both comfortable that clear directions for Uncle's wishes were in place and properly communicated in the will. Of course nuances of parts of the will and purposes therof were shared verbally by Uncle with Ol' Abner through the years prior to the inevitable death. Should have been fairly simple to just arrange for supporting documentation of death, accumumulation of all assets and writing out the checks to the heirs. TAXES! That was the kink in the works.

Try getting the same answer to the same question more than once from the IRS! Whatever you do, don't attempt to find the answer in the current pages of the tax code. A huge "Caution, Do not attempt to search for answers without weeks and weeks of your time available" should be posted on their website. The estate was small enough to be exempt from inheritance taxes. The funds, however, were in IRA accounts at a large investment firm. To further complicate matters, those pre-tax funds were moved to the estate during two different tax years. Now we all know that $$ in an Individual Retirement Account are taxable at the current rate of the taxpayer at the time of withdrawel. Great system for maximizing savings for growth and deferring taxes until after our high wage years.

Abner's delimma...how much tax is due and when should it be paid. Answers ranged from $0 to 49% of the total. Now that's a pretty wide range. Tax professionals interviewed all offered variations on the amounts with only limited facts supplied by Ol' Abner. Finally he bit into the proverbial bullet and hired a CPA to advise and assist in distribution of the checks to the heirs. Today he just mailed checks to nine heirs with no taxes deducted. The CPA is sending a form K to the IRS and to each recipient showing the IRA distribution. Some of them are on small fixed incomes and will owe little or no taxes on the money. Each will pay taxes at his current taxable rate.

A bit of nostalgia stings as we talk about Uncle and Aunt. He was the oldest of four siblings and the first to pass on. Memories of his kindness are bubbling over along with his stubborn streak and sense of authority that seems to be inate in oldest children. He took responsibility for his siblings whenever they were in need, always standing back and saying little, but supportive none the less. Aunt died a few years ago. She watched as both of her sons died from progressive deseases while she herself suffered deteriorating health. Uncle's stoic efforts to make each of their final days better is at the forefront of our mind. Now this bit of inheritance may make the lives of siblings and grandchildren a little easier for a time. I do hope they will be thankful that these two wonderful people were in their lives.