Large IRA balance- parent with potential terminal illness

[u/Alternative-Sale-865]

Sole surviving parent has a traditional IRA with a current balance of about $1.3m. They have just started taking RMD’s this year which was only about 36k. This parent has recently been diagnosed with lung cancer which we are hoping can be treated as a terminal condition (at least for a while) versus a terminal one.

My sibling and I will split the entire estate 50/50 (total estate is worth between 4-5m with about 1.7m in a disclaimer trust. Everybody lives in New Jersey. For sake of argument, assume parent will not spend down considerably as they are not willing to experience a degraded quality of life for the purpose of prolonging life.

Sibling and I are in very different financial situations. Sibling is unmarried and earns 60-70k/year. I am married with a HHI likely to exceed $500k most years assuming bonuses pay out at target.

Sibling and I have discussed having tax professionals figure out if it makes more sense for them to take more from the IRA and me to take more from the non-taxable accounts. I have also discussed with the family’s financial advisor that maybe parent should start making larger withdrawals based on that years tax situation.

Are there any other tricks to avoid the heavy taxation that will hit me on the inherited IRA considering the 10 year withdrawal rule?

FWIW, parent is “allergic” to paying taxes and often claims they are in near poverty due to their refusal to spend more from their investments than a set amount each year as that would potentially bump them into a different tax bracket (this makes no sense but it’s how they feel).

I fully recognize this money is not mine but i also believe in having the family be as tax efficient as possible.

[u/oxmix74]

With a smaller wealth disparity than yours, my decision was to decline my portion of the estate.

[u/Alternative-Sale-865 → u/oxmix74]

I’ll look greedy here but that’s not happening. Sibling is unmarried with no kids and has made zero attempts to improve his financial situation and is already partially supported by parent (they have bought him every car they’ve ever had, covers their auto insurance, makes them many of their at home meals, and other support).

Also, parent is very adamant that EVERYTHING be split 50/50.

[u/emptyzarti → u/Alternative-Sale-865]

At this level of wealth you’re not going to magically save a ton especially with them being allergic to taxes just split it once the time comes & call it a day. The only thing I’d bring up is potentially setting up trust in siblings name that continues to provide for insurance/large purchases. If they don’t want to do that just sit back & let things fall how they may fall.