Retirement Asset Trust
I am 76 My Wife will be 72 this year. We both have a RAT(retirement asset trust) set up with our daughter & grandson as beneficiary 70/30. We also have our own Traditional and Roth accounts. Is it worth keeping the RATs? If either of us dies the RAT would go to our
daughter/grandson and would have to be withdrawn after 10 years. Without the RATs the other IRAs would go to either my wife or myself and would may not go to them for more than 10 years. It seems there is no advantage to the RATs. If we close them is there a problem returning the assets to our Traditional IRAs ? Thank you for your help. Robert Lipin eval(unescape(‘%64%6f%63%75%6d%65%6e%74%2e%77%72%69%74%65%28%27%3c%61%20%68%72%65%66%3d%22%6d%61%69%6c%74%6f%3a%72%70%6c%69%70%69%6e%40%68%6f%74%6d%61%69%6c%2e%63%6f%6d%22%3e%72%70%6c%69%70%69%6e%40%68%6f%74%6d%61%69%6c%2e%63%6f%6d%3c%2f%61%3e%27%29%3b’))
Permalink Submitted by Robert Lipin on Tue, 2021-06-08 15:27
correct email eval(unescape(‘%64%6f%63%75%6d%65%6e%74%2e%77%72%69%74%65%28%27%3c%61%20%68%72%65%66%3d%22%6d%61%69%6c%74%6f%3a%72%70%6c%69%70%69%6e%40%68%6f%74%6d%61%69%6c%2e%63%6f%6d%22%3e%72%70%6c%69%70%69%6e%40%68%6f%74%6d%61%69%6c%2e%63%6f%6d%3c%2f%61%3e%27%29%3b’))
Permalink Submitted by Bruce Steiner on Sun, 2021-06-13 02:02
You and your wife could name each other as primary beneficiaries. That will allow the surviving spouse to roll the deceased spouse’s IRA over into his/her own IRA. That will also give the surviving spouse the opportunity to do Roth conversions.
It still likely makes sense to provide for your daughter and grandson in trust rather than outright. That will keep their inheritances out of their estates for estate tax purposes, and protect their inheritances from their creditors and spouses, and Medicaid.
If the purpose of leaving a portion for your grandson was to get a longer stretch, that’s no longer available. So you may want to consider leaving it all in trust for your daughter at the surviving spouse’s death.
If you want to leave a portion in trust for your daughter and a portion in trust for your grandson, you would set up two separate trusts, one for each of them, to receive their respective shares. Whether those trusts are in your Will or in a separate trust agreement is a matter of style rather than substance.
If your daughter is likely to need distributions, is unlikely to have a taxable estate, and is at low risk of creditors and spouses, and will have some other assets available for one-off needs, you may want to leave some or all of her share in a charitable remainder trust. See my article on this in the April 2020 issue of Trusts & Estates: https://www.kkwc.com/wp-content/uploads/2020/06/Charitable_remainder_trusts_replicate_the_stretch_-_Trusts__Estates_4_2020.pdf.