IRA with Estate Beneficiary
My client left an IRA account with his estate named as beneficiary. His will leaves most of his estate to a qtip trust with his spouse as beneficiary and the balance not going to the trust but to his children. Can the executor direct the IRA custodian to rename the IRA for the benefit of the trust and have the custodian make the distributions to the trust with the trust passing the income through to the trust beneficiary (spouse). RMDs had begun on the IRA thus I believe that the RMD’s can be continued based on the single life table. Is this correct. Since the children are the beneficiaries of the estate in excess of the QTIP trust funding level is there an option of having them designated as beneficiaries of an inherited IRA and having the distributions calculated based on the oldest child’s life expectancy.
Permalink Submitted by Bruce Steiner on Fri, 2007-12-07 04:30
Since he already reached his required beginning date, then except as noted below, his estate or beneficiaries can stretch the distributions out over his life expectancy as of his death (as if he had not died).
But if the executor is distributing the IRA in satisfaction of a pecuniary bequest, the IRS takes the position that this accelerates the income. TAM 200644020.
With enough disclaimers, it may be possible to get the IRA to the spouse, in which case she could roll it over. See my article on this subject in the October 1997 issue of Estate Planning: http://www.kkwc.com/docs/AR20050125164755.pdf