Revocable Living Trust as beneficiary
we have a client that named his RLT as beneficiary of estate with his brother as beneficiary of the trust. must of estate is in a T-IRA. does the brother have take distributions over the 10 yrs? or 5 yrs?
The client passed in 2021. the client is the named beneficiary of the trust. the RLT is the primary beneficiary of the IRA.I am understanding if no mention of the trust on the ira agreement then it would be LE of the client.But if trust is named beneficiary on the agreement?Thank you so much!
The client should be the grantor of the RLT. Isn’t client’s brother the beneficiary of the trust? If so, and the trust is the beneficiary of the IRA, and if the trust is qualified for look through, then if brother is not more than 10 years younger than client (or disabled), brother’s LE can be used for RMDs. If brother does not meet either of those requirements, the 10 year rule would apply.
Just finding out there are 4 beneficiaries. they will be dividing and opening 4 Bene IRAs. anything change for this brother? who by the way is not less than 10 yrs so will be held to the 10 yr rule.
If the trust can be terminated, there may not have been a good reason not to leave the IRA outright to the beneficiaries. If the trustee assigns the inherited IRA out of the trust to the trust beneficiaries, the particular beneficiary you are dealing with will be subject to the 10 year rule. But if the trust is not qualified for look through that will change the RMDs depending on whether client passed prior to RBD or after. In other words, even if the trustee is allowed to terminate the trust, they will still have to submit the trust details to the custodian prior to the deadline to determine what the beneficiary RMDs will be from their inherited IRA accounts.
Permalink Submitted by Alan - IRA critic on Mon, 2021-03-15 16:57
What is shown on the IRA agreement as the beneficiary? If no reference is made to the trust, the trust will not be treated as qualified for look through. If client died prior to his RBD, the 5 year rule would apply, otherwise the remaining LE of the client.