Skiping the trust and moving the IRA to the surving spouse IRA

Submitted by Stephen Csenge on Wed, 2017-04-05 22:09

Mr and Mrs Smith have the Smith Family Revocable Trust with Mr and Mrs as the Trustees. Mrs. Smith passed away and the attorney has her IRA beneficiary as the trust. Given that Mr Smith is the only trustee, the tax id is his social security number and he has full rights to add or remove assets from the trust……… Can he skip the trust and just move Mrs Smiths IRA into his IRA as he and the trust are essentially one-in-the same?

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Permalink Submitted by Alan - IRA critic on Wed, 2017-04-05 23:47

Is he also the sole beneficiary of the trust? What do the trust provisions indicate?

Permalink Submitted by Stephen Csenge on Thu, 2017-04-06 15:00

The trust provisions provide him full discression on moving assets into or out of the trust as well as using any amounts as he chooses. When he passes the final beneficiaries of the trust are the two children. Since he has authority to move assets into or out of the trust, can he move the IRA out and into his own IRA?

Permalink Submitted by Bruce Steiner on Thu, 2017-04-06 15:58

There have been lots of private letter rulings allowing the rollover in these situations. See my articles on this subject in the October 1997 issue of Estate Planning, http://kkwc.com/wp-content/uploads/2015/04/AR20050125164755.pdf , and in the June 2015 issue of Trusts & Estates, http://kkwc.com/wp-content/uploads/2015/08/IRA-Rollovers-Making-this-option-possible.pdf .

Despite the large number of private letter rulings on this, I still don’t understand why an IRA owner would create such complexity when he/she could simply name the spouse as the beneficiary of the IRA.

Permalink Submitted by Stephen Csenge on Mon, 2017-04-10 17:55

Thanks. Read the articles. Is there a way this can be done without a private letter ruling?

Permalink Submitted by Bruce Steiner on Mon, 2017-04-10 18:27

That may depend on what the custodian requires. They may allow it, they may allow it with a legal opinion, or they may require a ruling.

I continue to be puzzled by why an IRA owner would create such a complicated structure when she could have simply named her spouse as the beneficiary her IRA.

Permalink Submitted by Stephen Csenge on Mon, 2017-04-10 21:08

I agree on you puzzlment but it is typically not the IRA owner, it is the attorneys that do the trusts