Naming beneficiaries on non-spouse inherited IRA
The beneficiary of my deceased client’s IRA is an irrevocable see-through trust. The intended income beneficiary of this trust is her husband with contingent takers being her two daughters.
How to title the inherited IRA to be established?
How to name successor beneficiaries of this inherited IRA? (are successor beneficiares still the trust, or can they be the two daughters which in turn can then choose to establish their own inherited IRAs upon the husband’s death?)
By failing to name a successor beneficiary and upon the husband’s death, could the trust simply continue to collect the RMD based upon husband’s life expectancy and continue to pay out to daughter’s at the same rate? (trust document would allow this)
By in fact naming successor beneficiaries, can the trust be terminated (as allowed for in the trust document) at the husband’s death with each beneficiary establishing their own inherited IRA (thus avoiding continuing trust administration expenses)?
Permalink Submitted by Alan Spross on Thu, 2008-04-24 00:42
IRA should be re titled to “Richard Jones Irrevocable Trust as beneficiary of Richard Jones” – IRA custodian should be given the trust EIN.
With a trust beneficiary a successor beneficiary would be redundant since the trust essentially contains the successor beneficiary provisions within the trust. If a successor beneficiary was named on the IRA it would not affect the RMD based on the oldest trust beneficiary in any way. The initial RMD schedule continues upon the husband’s death whether a successor beneficiary was added to the IRA or not. Therefore, there is no reason not to wait until the trust can actually terminate and the IRA assigned before each daughter names their own successor beneficiary.