Trust as an IRA Beneficiary
Client wants his 8 year old grandson to be one of the contingent beneficiaries.
Client prefers a trust so his instructions are spelled out. I’ve seen in prior posts that the requirements for a trust to be a qualified designated beneficiary are listed on page 12 of Pub 590 B.
Are there any other requirements to consider?
Thanks,
Permalink Submitted by Alan - IRA critic on Wed, 2018-06-06 20:49
If client includes a charitable beneficiary in the trust, it is critical that the charitable interest be fully distributed no later than 9/30 of the year following the year client passes (the beneficiary determination date). If the charity is not paid by then, the trust will not be qualified. Adding a charity beneficiary to the trust therefore increases risk of error. Also, the requirement to provide the IRA custodian with the trust information is the responsibility of the trustee of the trust, and if the trustee overlooks that deadline the trust will not be qualified.
Permalink Submitted by Bruce Steiner on Thu, 2018-06-07 02:16
See my article on this subject in the March 2004 issue of BNA Tax Management’s Estates, GIfts & Trusts Journal: https://www.kkwc.com/wp-content/uploads/2015/04/AR20041209132954.pdf .