I have a client that has a living trust with 20 different beneficiaries. We are naming the trust as beneficiary of her I.R.A’s, there is around$300,000 in qualified money. At death will it be taxed to the trust or the individual beneficiaries?
thanks – Frank Dogger
Yet another followup question
We (self and spouse) currently have our living trust designated as beneficiary for our 401Ks, Roth and TIRAs.
In perusing this forum , it appears that this actually complicates passing on these assets and we are better off in designating the spouses as primary beneficiaries and our adult children as secondary beneficiaries directly. Am I correct ?
P.S. – The Living trust has myself + spouse as current trustees and our 2 adult children are designated as trustees after us.
At first death living trust will be irrevocable. IRA account owner has died how to rename ownership of IRA ? Who will transfer funds from IRA to trust and pass through to beneficiary?
It was my understanding that at first death, the surviving spouse who will become the sole trustee can do the transfer. After the second death, the new trustees (children) can do the same. Open to correction/thoughts.
After reading https://www.irahelp.com/slottreport/stop-naming-trusts-ira-beneficiaries I went ahead and updated our 401k and IRA beneficiaries to individuals :). I should have done my due diligence instead of following the trust creation attorney’s advice.
Permalink Submitted by Alan - IRA critic on Fri, 2023-04-28 22:06
If the trust retains distributions, they will be taxed at the high trust tax rates, but if the trust passes distributions currently to the trust beneficiaries on a K 1, the beneficiaries will be reporting the taxable income at their personal tax rates. The trustee of the trust will have a challenging job.