Naming Trusts as IRA Beneficiaries
Just read Andy Ives 8-10-20 article on not naming trusts as IRA beneficiary, except for minors. My trust atty feels my Roth IRAs should have the trust as beneficiary, not my 2 adult kids. Atty stated if one predeceases me, it’s best to have the trust allow for my granddaughter, a 6 yr old, to inherit with assets going into a trust until she turns 25. If IRA just has my 2 kids, even if assets go per stirpes, a custodian would need to be appointed for the minor & request made to court to request assets for her. Is this one example when IRA beneficiaries should not be named individuals? I wanted to make it as simply for my kids as possible, but apparently nothing is simple!
Permalink Submitted by Bruce Steiner on Sun, 2024-04-14 22:46
It’s one of many examples where it makes sense to leave IRAs in trust rather than outright. Our clients generally provide for their children in trust rather than outright, to keep their inheritances out of their estates for estate tax purposes, and to protect their inheritances from their creditors and spouses, and Medicaid.
What is “the trust?” Wouldn’t you leave it to your children in separate trusts for their benefit, with a deceased child’s share going in trust for his/her issue, or if none, then to your other child’s trust (or to the trusts for your other child’s issue if your other child also predeceased you)?