Revocable trust (without names beneficiaries) named as IRA beneficiary

Submitted by John Foster on Wed, 2022-12-21 19:41

A client just sent us her mom’s will and trust. All are in CA. The trust and will name the daughters as co-trustees and co-executors. The will is pour over. However the trust names no beneficiaries and has no definitive dispositive provisions.

The mom is now deceased. The IRA owned by her names the trust as beneficiary. The attorney in our companies Business Resource Center suggested that the whole estate will need to be presented to probate and they could ask the judge to order the 2 daughters as IRA beneficiaries and thereby be able to take the 10 year provision.

How will this affect the distribution of the IRA?

Thank you,

Scott Foster



Submitted by Alan - IRA critic on Wed, 2022-12-21 20:45

  • If the trust is not qualified for any reason including the requirement that the trust beneficiaries be identifiable, the IRA will be subject to the 5 year rule if Mom passed prior to RBD, and her remaining LE if she passed after RBD. The 10 year rule would not apply. If the attorney who drafted this trust is still around, they should be asked be asked for an explanation.
  • Your company attorney must think that this trust is so deficient it will be disregarded as the IRA beneficiary, and the pour over provision would follow. If that’s the case, the IRA would follow the same guidelines as a NQ trust outlined above, but it would not make the daughter’s designated beneficiaries. They could assign the inherited IRA out of the estate to separate inherited IRAs with a cooperative IRA custodian, but that would also not change the RMD calculation. Much depends on the age of Mom upon passing.

Submitted by John Foster on Wed, 2022-12-21 21:53

The mom definitely was beyond the RBD. Am  I correct that generally that the RMD calc is preferable on the deceased remaining LE?

Submitted by Alan - IRA critic on Wed, 2022-12-21 23:23

It looks to be the only option given the lack of trust provisions. If deceased was in her 70s, the inherited IRA would last more than 10 years with the annual RMDs, if over 80 progressively less than 10 years using the required single life table.

Submitted by John Foster on Thu, 2022-12-29 23:32

Some missing pages were found naming the two daughters as beneficiaries of the trust. The settlor was taking RMDs. Does the LE apply or the 10 year rule?. Thank you

Submitted by Alan - IRA critic on Fri, 2022-12-30 00:23

Unless the mother passed in 2022 (DOD not stated), the deadline has passed for submitting these missing pages to the custodian that would qualify the trust. The remaining LE for mother would be used for determining annual RMDs to the NQ trust. Mother’s age in the year she passed would be the starting point for the divisors. If she was still in her 70s this could produce a stretch longer than 10 years. 

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