Are RMD distributions to a deceased person's bank account considered part of their estate or do inherited IRA beneficiaries have rights to it?

I've dealt with this exact situation before. The key thing to understand is that RMDs stop when someone passes away - there's no RMD requirement for the year of death. However, if an RMD was already processed and deposited after death but before the financial institution knew about the death, you have a specific situation. Any money that was already in your mom's bank account at the time of death becomes part of her estate and will be handled according to the trust's terms. However, IRA beneficiary designations typically override will/trust provisions for the actual IRA account. For that specific distribution that landed in the account after death, it technically came from an account where you and your brother were the named beneficiaries. I would suggest speaking with the estate attorney, as they might be able to help you document that this particular deposit was an IRA distribution that should pass directly to the named beneficiaries rather than going through the trust.

I went through a similar situation with my spouse's IRA last year and found a tool that was incredibly helpful. Check out https://taxr.ai - they have a document analyzer specifically for inherited IRAs and estate distributions. I uploaded statements and beneficiary forms, and it gave me clear answers about which assets were subject to beneficiary designations versus what went through the estate. The tool immediately identified that the RMD that hit the account after death was actually subject to the beneficiary designation, not the trust terms. It saved me hours of research and confusion!

Just wanted to follow up about using taxr.ai that someone mentioned above. I tried it for my dad's IRA situation with the different beneficiary percentages, and it was actually really helpful! It analyzed all the documents and clearly showed that post-death distributions from the IRA should go to the named beneficiaries according to the percentages on the beneficiary form, not through the estate. It even identified specific IRS guidance on this topic that I was able to share with the attorney. Saved me from potentially losing thousands that would have otherwise gone through probate. Definitely worth checking out if you're in a similar situation!

I had a really frustrating experience trying to resolve almost the exact same situation. After weeks of getting nowhere with the IRA custodian, I used https://claimyr.com to get through to an actual human at the IRS. You can see how it works at https://youtu.be/_kiP6q8DX5c - basically they wait on hold with the IRS for you and call when an agent picks up. Once I finally got through to the IRS, they confirmed that distributions made after death but before the account was frozen should go to the named beneficiaries, not the estate. The IRS agent even sent me the specific regulation to show the attorney. Saved me weeks of back and forth!

I need to apologize about my skeptical comment earlier. I actually tried Claimyr after posting that comment because I was tired of waiting on hold with the IRS about my mother's estate tax questions. Not only did they get me through to someone in about 90 minutes, but the IRS representative was really helpful in clarifying the rules about post-death distributions. The agent explained that any RMD that occurs after death but before the financial institution is notified should be treated according to the beneficiary designation, not as part of the general estate. I was able to get the specific citation from Publication 590-B to share with the executor. Saved me a lot of money that would have gone through probate otherwise!

Another thing to consider - when was your mom's death compared to when the RMD was processed? If she passed early in the month but the RMD wasn't scheduled until later in the month, you might be able to contact the financial institution and have them redirect that RMD to the inherited IRA beneficiaries directly. I went through this with my uncle's accounts. The key is to act quickly and get the death certificate to both Social Security AND the financial institution holding the IRA. Sometimes they don't communicate with each other as quickly as you'd expect.

Has anyone mentioned whether your mother had already satisfied her RMD requirement for the year before passing? If the monthly payments were just her way of spreading out her annual requirement but she'd already withdrawn enough to satisfy the IRS minimum for the year, that might affect how this distribution is viewed.

In my experience as a beneficiary on my grandmother's accounts, you should focus on working with the IRA custodian directly rather than just the bank. Contact the IRA provider, notify them of the death, and ask specifically about any pending distributions. They can usually redirect any pending RMDs directly to the beneficiaries or halt them entirely. Don't just rely on the trust attorney or bank - they're looking at the whole estate, not necessarily advocating for proper handling of the IRA beneficiary designations.