Second Wife-Non-Spouse Beneficiaries
I will soon marry my co-habitation (22 yrs) partner. It will be the second marriage for both of us. In the event of my death, I want the income from my IRA Retirement Accounts to fund my (new) wife’s “Merital Trust” in order to provide income for her until she dies (or re-marrys). We are both in our early 70’s. I have about 700K in investments, she has none. I want to provide income for her but keep the investment principle for my childrens benefit, my non-spouse co-beneficiaries (son & dau). Is there a good method for setting this up? My non-spouse beneficiaries will have considerably more income than my wife (widow). Is there a good way for her to receive this income, yet minimize the taxes without her gaining control of the assets?
Permalink Submitted by Bruce Steiner on Tue, 2013-04-09 04:27
You can leave your retirement benefits to her in trust rather than outright. That will accomplish your objective of making them available for her if she needs them, but having the balance at her death go to or in further trust for your children. The tradeoff is that she won’t be able to roll them over or convert to a Roth, and the stretch will be limited to her life expectancy.For more on trusts as beneficiaries of retirement benefits, see my article on that subject in the March 2004 issue of BNA Tax Management’s Estates, Gifts & Trusts Journal: http://www.kkwc.com/docs/AR20041209132954.pdf.