IRA Inheritance trust
Ive got a detailed question for you regarding the Inheritance Trust, Pros and Cons, and then also is there anyway to avoid rmd’s other than doing a roth conversion and also what is the tax implication on that. Thank You
Ive got a detailed question for you regarding the Inheritance Trust, Pros and Cons, and then also is there anyway to avoid rmd’s other than doing a roth conversion and also what is the tax implication on that. Thank You
Permalink Submitted by Bruce Steiner on Fri, 2008-02-08 18:51
You didn’t say what your question was. But where the amount involved is sufficient, our clients generally provide for their children in trust rather than outright, to better protect the inheritance from potential creditors (including spouses), and to keep the inheritance out of the child’s estate. The same reasons apply to IRAs as to other assets.
In the case of an IRA, the complexity is that none of the accumulated IRA benefits can ever go to anyone older than the person whose life expectancy is being used to calculate the required distributions (in most cases the oldest child’s life expectancy). Here is an article I wrote on trusts as beneficiaries of retirement benefits in the March 2004 issue of the BNA Tax Management Estates, Gifts & Trusts Journal: http://www.kkwc.com/docs/AR20041209132954.pdf
Calling it an IRA inheritance trust is just a marketing gimmick. The trust can be in the Will, or in a separate trust instrument, depending on stylistic preference.
Bruce Steiner, attorney
NYC
also admitted in NJ and FL