IRA Trust

Submitted by Richard Ernst on Fri, 2016-11-18 19:58

I came across a ” Retirement Trust” which noted that Expenses & Taxes were to be paid by Trust assets. Assuming said client passed away prior to RMD’s ( younger than age 70 1/2 ), wouldn’t the trust assets be mandated to be paid out within 5 years?

Don’t we have ” Designated Beneficiary ” issues by having expense & tax language written into the IRA Trust?



Submitted by Richard Ernst on Fri, 2016-11-18 20:39

I forgot to mention that the Primary Beneficiaries are the kids, age 22 & 15.  The Contingent Beneficiaries include two Temples & about 7 other people much older than the kids.  Are the Temples ( no LE ) part of the ” Designated Beneficiary ” formula?          

Submitted by Bruce Steiner on Sat, 2016-11-19 22:35

  • The trust has to pay its own expenses.  For example, if the trustee hires an accountant to prepare the trust’s income tax returns, the trust will have to pay the accountant. 
  • The trust will have to pay any taxes it may owe.  For example, if the trust receives a distribution from the IRA, it will owe income taxes on it (unless the trustee distributes it to the beneficiaries).
  • What do you mean by contingent beneficiaries?  After the children die, whatever is left in the trust(s) has to go somewhere?  Where does it go?  What are the dispositive terms of the trust?

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