IRA held for grandkids’ HEMS until 25

Submitted by sheriff naggar on Tue, 2016-10-25 14:15

Upon Graddad’s death, his rev living grantor’s trustee is to hold granddad’s traditional IRA for his grandkids’ HEMS until 25.

Can the trustee distribute the RMDs to a UTMA/UTMG account and then have the grandkid’s parents manage that account until age of majority? Would that avoid any trust tax rate for accumulated income?



Submitted by Bruce Steiner on Wed, 2016-10-26 03:35

  • Not if the trust limits distributions to health, maintenance, support and education.
  • Why would anyone so limit distributions before 25 and then mandate that the entire trust be distributed at 25?  Why not give the trustees complete discretion and then give the beneficiary effective control over the trust beginning at age 25?
  • While revocable trusts make sense in some cases, and in some states, they’re overhyped and oversold, and in most cases, in most states, aren’t necessary, and tend to be a distraction.
  • Bruce Steiner

Submitted by sheriff naggar on Wed, 2016-10-26 16:14

Thank you Mr. Steiner,So the answer is “no” on whether trustee can distribute to UTGA accoutn and “yes” on whether there will be a tax on the RMD if it’s distributed into a UTGA account. 

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