Inherited TIRA
Mom passed away with a TIRA. The Will creates a special needs trust for my brother, the TIRA is to be
transferred to the trust. The TOD for the TIRA divides it into 3 equal parts for my brother, my sister and
me, this somehow got overlooked when planning. My mom, sister and I intended for all assets to go to the Trust as stated in the Will we do not want inherited IRAs because of the difficulty in redirecting funds back to our brother. Any thoughts on how to follow the direction of the Will. Thanks Jon
Permalink Submitted by Alan - IRA critic on Wed, 2018-02-14 17:29
The IRA beneficiary designations govern this situation, and a such not naming the SNT as a 1/3 beneficiary was an error. First of all, the two of you should create your own separate inherited IRA accounts with your 1/3 shares of the inherited IRA. Your brother should do the same, and then check with a local trusts attorney on what action to take from there. IRS PLR 2006 20025 allowed a special needs beneficiary to transfer an inherited IRA to the SNT as a self settled trust and perhaps this is what the attorney will recommend. While that would protect brother’s benefits from being cut to his inherited IRA RMDs, the drawback of a self settled trust is that anything left in his estate cannot go to his beneficiaries, but will go to the state as reimbursement for their Medicaid expenses. Again, this is generic info, so a local trust attorney versed in SNTs should be consulted.