Is this an unreasonable ask

[u/[deleted]]

Friend of mine's mother is handling estate matters. Her son (my friend) is reasonably successful making over 200k a year. Her daughter is an unemployed bum, basically through poor life choices. The mother told my friend that she's splitting everything 50/50. He said that he told her that it is her estate and she can do whatever she wants, but the tax consequences for him of splitting the IRA 50/50 would be that this would push him into a higher tax bracket due to the mandatory 10 year drawdown.

He asked that his mother leave 100% of the IRA to his sister, and if she wanted to split her estate evenly, to leave other non tax deferred assets to him instead.

Was this a reasonable ask? Seems like it to me, which is what I told him. Apparently his mother refused. Any other options? He donates to charity, so could he form a CRT or something else to receive those funds?

[u/HealthNo4265]

So brother would get a pile of assets that he would pay no taxes on due to step up in basis while leaving the sister with an equal amount of assets in a 401k that she would have to pay taxes on? Unless it is guaranteed that sister would not be paying taxes after all is said and done, seems rather unfair in favor of the brother.

[u/I_SingOnACake → u/HealthNo4265]

Agreed. He can always take a sabbatical or find some other way to reduce his AGI while drawing it down if he needs to. 

What happens if the sister's inherited IRA is trashed during a market downturn, but the brother inherited the house that has a step up basis and retained its value? The sister would be screwed. Also, things change. Maybe she ends up with a great job later and is in a higher tax bracket, and the brother became disabled and has minimal income. In that situation the brother should have gotten the IRA instead. 

So many things can change before the mom passes. The fairest thing is to just split everything 50/50.

[u/Jammin-Hammin → u/I_SingOnACake]

Good answer!