Designated Beneficiary
I have a client who recently remarried. His attorney updated his will. When my client passes away, a trust gets established through his will. Most of his assets are IRA assets. I understand that a trust can be a designated beneficiary as long as certain rules are followed. I also understand that the “estate of” someone is not considered a designated beneficiary. Does my client need to establish his trust now? Or is he already set up in a way that allows the IRA to be stretched after his passing? Any clarification would be greatly appreciated.
Permalink Submitted by [email protected] on Mon, 2007-08-20 20:05
Assuming the trust will be a qualified see-through trust, then the bene of the IRA will be “The (name of trust) testamentary trust established by my will dated mm/dd/yyyy”.
Permalink Submitted by Greg Miller on Mon, 2007-08-20 20:15
So assuming the trust is a qualified see-through trust, and naming the benes of the IRA like you stated….that would make it a “designated beneficiary?”
Permalink Submitted by Alan Spross on Mon, 2007-08-20 20:31
Technically, a trust cannot be a designated beneficiary. However, if the trust is a named beneficiary as Al indicated, and qualified for look through treatment per Pub 590 p 38, then the individual named beneficiaries of the trust qualify for the RMD treatment of designated beneficiaries.
Note that there should be no non-individual beneficiaries of the trust, and the individual beneficiaries do not qualify for separate account treatment. The RMD will be based on the oldest named trust beneficiary, and if the trust is allowed to accumulate the RMD income, then the ages of contingent beneficiaries also must be considered.