A trust named as a IRA beneficiary instead of the child involved
Can I create a trust for my daughter instead of naming her directly? Can the trust then follow the IRA rules for rolling the monies into a life time payout based on her age etc.? In other words, the trust is her, following the IRA rules on disbursements. Without paying the upfront taxes that normally go along with a IRA disbursement? My objective is to stop her from taking the money out in a lump sum, pay taxes on, then spending it. Hope I explained this right.
Permalink Submitted by Bruce Steiner on Mon, 2013-09-02 17:10
Yes. Assuming you set it up correctly, the trustees will have to take distributions over her life expectancy, and will then be able to distribute to her (or her children and grandchildren) as much or as little as they deem appropriate. See my article on this subject in the March 2004 issue of BNA Tax Management’s Estates, Gifts & Trusts Journal: http://www.kkwc.com/docs/AR20041209132954.pdf. There are some special rules involved in drafting the trust (which can be included in your Will), so this is not a do-it-yourself project.
Permalink Submitted by Warren Kuetemeyer on Tue, 2013-09-03 15:53
My IRA is with Fidelity Investments. I’m thinking, as they are the fiduciary, they could also be the Trustee?? And I would like my one daughter to be a co-trustee with them. She is smart and could keep close watch on how monies invested. In your experience is this possible? Lastly, I’m in Woodstock, IL, any attorney you can recommend in my area? Thanks again