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I don't know why you think there are tax implications to how it's distributed (unless you are considering a lump sum distribution of the IRA, which would be insane). You don't pay income taxes on inherited money unless it is subject to estate taxes which have like a $5.5 million exemption. The only really important thing I think you need to worry about as far as the actual probate/inheritance process is making sure you preserve the money that is currently in an IRA by rolling it into a new "inherited roth IRA" without screwing it up. If you leave the money with Fidelity I'm sure that they can help you through the process, and they are a perfectly acceptable place to leave it. In addition to the IRA money, once the estate is settled your wife should receive a check for the remainder of the money (i.e. half the proceeds from the sale of the house, other money they found, etc). That money is not taxable, and can be put into any account she wants (e.g. a standard brokerage account at Fidelity). It seems pretty obvious that you should use the life expectancy distribution method to preserve the money in the inherited roth IRA as long as possible, which will also help you not blow through it. You will almost certainly have enough money to pay off your credit cards from the sale of the house and other moneys without having to access the IRA money at all. Even if you don't, you will have to take an annual distribution from the inherited IRA which would let you pay off the cards pretty quickly anyway. I would also recommend to your wife that she keeps this money separate from you to avoid "comingling" the funds. I'm not trying to sound like a dick, but you managed to rack up $45,000 of credit card debt with an income of $2800 per month which is insane. Keeping the funds separate will prevent you from spending it all while simultaneously providing her with a legal separation of assets in the event of a divorce (i.e. you wouldn't be able to take half of her inherited money in a divorce, even if you live in a community property state like California http://heleneltaylor.com/inheritance-separate-property/).
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Mar 9, 2016 17:57
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| # ¿ May 21, 2024 21:57 |
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Dwight Eisenhower posted:You have had physical possession of these credit cards while getting them to a $0 balance. If you can climb out of the hole, you can also avoid falling into it. He didn't climb out of debt, his wife inherited like $750k and they paid it all off along with the mortgage. To the OP, I suggest you work towards getting a good rewards credit card that you run all your bills through and pay off monthly. This will provide you with cash back or points, as well as increased fraud prevention and other benefits like travel insurance and extended warranties. If your credit is too bad to qualify for a good credit card, you just have to wait a couple years for it to improve. I personally use a Fidelity 2% cash back card, along with a Penfed card for gas (about 4% on gas) and an Amazon store card for amazon stuff (5%). There are possibly better options now, but at the very least I recommend a 2% cash back visa like the Fidelity one.
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Oct 21, 2016 17:33
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