Don’t designate spouse as Beneficiary?
I watched Ed on PBS a few weeks ago (How To Stay Rich Forever And Ever). For tax purposes, I believe Ed said to leave your money in a trust or (something with your children . . .) instead of designating your spouse as the beneficiary. I had 1 eye and 1 ear on the tv; the other on cooking dinner, so what I understood here might have been wrong. Can somebody correct/educate me on subject?
Permalink Submitted by Alan Spross on Fri, 2008-04-11 04:18
He may have been referring to leaving much of the IRA to the children, who can then stretch distributions over their much longer life expectancies. Going one step further, if unlimited access to the IRA balance is to be denied, then a discretionery trust must be set up that limits the child to the RMDs only or perhaps even holds the RMDs in trust.
The spouse (if the mother) will have a much larger RMD than the children and therefore more tax deferral will be lost on the portion left to the spouse, even if the surviving spouse limits distributions to their RMD.