IRA in the name of a trust
When we set up IRAs at our instituion we do not set them up under the name of a trust. We allow the trust to be a beneficiary however.
With that said, somehow we have an IRA in the name of a trust. I believe from what i can ascertain, that the owner of the IRA has passed. If the owner of the IRA was the owner of the trust the trust would now be irrevocable. So whether the IRA has listed beneficiaries or not, does the successor trustee have the right to distribute the IRA funds to any beneficiaries listed in the trust per the grantor’s directive? What superceeds? Trust benes or IRA benes? (I know, this is why we try to make sure we don’t have IRAs in the name of a trust)
Thanks
Permalink Submitted by mk foss on Fri, 2009-06-05 18:38
A trust cannot “own” an IRA but can be named the beneficiary. If the trust is the primary beneficiary, any contingent beneficiaries are eliminated once the disclaimer period has passed.
The successor trustee of the trust must follow the trust agreement in making distributions to trust beneficiaries of IRA proceeds. The successor trustee would not have the ability to name IRA beneficiaries. I don’t understand how their could be IRA beneficiaries that might supersede the trust beneficiaries.
Generally the successor trustee requests the RMD each year and transfers it to a trust account. The trustee would use those funds plus other income of the trust (if any) to carry out the requirements of the trust agreement.
Permalink Submitted by Jose Morales on Fri, 2009-06-05 23:50
As stated, a trust cannot own an IRA. If the IRA funds were transferred to the trust then it was effectively distributed from the IRA. This would apply even if a simple re-titling of the account occurred.