Mom has snt and as her trustee I need some advice about inherited iras in so cal

Submitted by Amanda Marr on Sun, 2015-10-04 08:51

I’m sorry if this has previously been touched upon so please forgive me. My grandmother passed in January of this year and my mother is a beneficiary of an snt that my grandmother had for the most part finished before her passing. Two inherited iras did not wind up going into the snt. I am wondering what my options are to prevent my mom’s health benefits from being taken away. I am not as concerned about the ssi, if there was a way to keep that intact she would be elated however if not it’s understandable. I spoke to a fiduciary and he had mentioned an annuity or rolling over te Ira but I’m not sure he’s exactly familiar with the workings of snts and their beneficiaries nor does my mom have an ira. Advice would be greatly appreciated from anyone with experience in these matters.



Submitted by Alan - IRA critic on Sun, 2015-10-04 19:05

  • Your mother should generally be able to transfer her interest in the IRA to her SNT in a non taxable transfer. This relates back to IRS PLR 2006-20025. Later the IRS released conflicting rulings outlined here:  http://www.bna.com/irs-issues-two-n12884902412/
  • Note that the adverse ruling was for the transfer of an owned IRA, not an inherited IRA. Therefore, there are two positive PLRs regarding a non taxable transfer of an inherited IRA to beneficiary’s SNT, and RMDs from the inherited IRA to the SNT would be calculated using your mother’s  life expectancy.
  • SNTs vary by state, so you or your mother should be dealing with an attorney specializing in SNTs who should know how to get the transfer done correctly. The IRS custodian might present resistance in re titling the inherited IRA with the SNT as beneficiary instead of your mother.

Submitted by Bruce Steiner on Sun, 2015-10-04 22:38

  • The rulings aren’t inconsistent.  The fact patterns are different.  In one, a beneficiary was permitted to transfer an inherited IRA into a special needs trust that she created for herself, and which was a grantor trust for income tax purposes.  In the other, an IRA owner was not permitted to transfer her own IRA to a trust.

 

  • The situation where a beneficiary was permitted to transfer an inherited IRA into a special needs trust that she created for herself is a different from this case.  In this case, the beneficiary wants to transfer an inherited IRA into a trust that her mother created for her benefit.  That trust wouldn’t be a grantor trust.

 

  • Bruce Steiner, attorney, NYC, also admitted in NJ and FL

Submitted by tomd37 on Sun, 2015-10-04 23:01

Please explain the term SNT

Submitted by Alan - IRA critic on Sun, 2015-10-04 23:28

  • Special (or supplemental) needs trust. Allows disabled person to avoid having the taxable income disqualify her for benefits.
  • Can she create another SNT as a grantor trust then for the inherited IRA?

 

Submitted by Amanda Marr on Fri, 2015-10-09 08:52

We have an attorney that drafted the over all trust for the beneficiaries ie my mom, her brother and her sister. It was later amended to have a special needs trust for my mom. My grandmother passed before the snt could be completed to allow the two affomertioned inherited iras to be transferred into it, as well. From what I gather, it’s being suggested that the inherited iras can be put into the snt? I’m not sure that’s possible in California. 

Submitted by Cheryl Hamilton on Mon, 2017-10-09 02:59

I have a situation and need some guidance:.My Client recently passed age 85. She had 2 IRA’s one in an Annuity (Approx. value 160K) and the other in regualr investments (15K). She left 25% to 3 of her children and 25% to SNT for the benefit of her daughter.Question 1. Because she named a SNT as a beneficiary in the IRA’s does the affect the  RMD age calculation for the other beneficiaries.Question 2.Since RMD’s are required from the SNT could that jeapordize the daughter’s SSI and other Medical benefits?Question 3.  If there is a negative impact on her government benefits, could the SNT refuse the inheritance.

Submitted by Alan - IRA critic on Mon, 2017-10-09 17:06

  1. Each of the individual beneficiaries need to establish separate inherited IRA accounts no later than 12/31 of the year following the year of client’s death. They can then use their own ages for life expectancy RMDs and not be negatively affected by the SNT beneficiary.
  2. The SNT is either a qualified trust for look through or not. This will affect the SNT inherited IRA RMDs. If properly drafted, the SNT should not affect SSI or other benefits.
  3. Should not be negative affect, but the SNT could disclaim although that would rarely be the best option.

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