Marital Trust
A client of ours called about his IRA. He would like to leave the IRA to his Marital Trust for his spouse, with a remainder over to his kids. The question is whether, upon the spouse’s death, the children can roll their shares of the IRA over into FBO accounts to continue the tax deferral, or to the proceeds come out and are subject to tax immediately?
Permalink Submitted by Malcolm Lunn on Fri, 2008-07-25 20:15
It is my understanding that if it hits the trust, they begin stretch over wife’s life expectancy and then if the kids inherit, they would continue the stretch
Permalink Submitted by Al Fry on Sat, 2008-07-26 03:03
Query, will the marital trust be revocable, or irrevocable? It may sound like a strange question, however people attach many different names to each.
Permalink Submitted by Bruce Steiner on Sun, 2008-07-27 02:06
Even if it’s revocable, after the testator dies, if he/she revokes it from the next world, we won’t know about it.
Permalink Submitted by Al Fry on Sun, 2008-07-27 02:43
Brtuce – here in IN, it is not unusual to have a Marital trust be revocable by the surviving spouse. I think most that you do are irrevocable, correct?
Permalink Submitted by Bruce Steiner on Sun, 2008-07-27 02:49
Why would anyone create a marital trust in which the spouse has the power to withdraw all of the trust assets? You might as well just leave the marital share to the spouse outright.
Permalink Submitted by Al Fry on Sun, 2008-07-27 11:51
Correct. I think some of the older surviving spouses just like what they view as a smoother transition when their spouse dies. Remember that (at least in my area), they use mostly Revocable Living Trusts v. Testamentary ones. I am financial Secretary for our Church’s Endowment Fund, and its not unusual for the donations to come from the couple’s RLT.
Permalink Submitted by Janine Janine on Sun, 2008-07-27 14:23
My understanding is that any revocable trust becomes irrevocable upon the death of the Trustor.
Permalink Submitted by Al Fry on Sun, 2008-07-27 15:09
Correct, however the “A” Marital CAN give full rights to the surviving spouse which could make the “A” trust revocable. Of couse if a Q-Tip is elected, that portion would also be irrevocable.
Permalink Submitted by Janine Janine on Sun, 2008-07-27 16:30
Thank you, Al. I was thinking of the Q-Tip Trust and the Revocable Living Trust.
Janine