Trust as Bene of IRA / Spouse only bene of Trust
Mates – it’s been a while! Despite my good advice (and I have the CYA letters to prove it) a recently deceased client of mine named her and her husband’s revocable grantor trust (a “joint trust” if you will, meaning no A/B trust provisions) as the primary and only beneficiary of her IRA. Her husband, who is the acting sole trustee and the only beneficiary of the trust during his lifetime, just discovered this fact.
Query:
1) Because H can change the trust, is the only current beneficiary of the trust (and can exhaust all trust assets if need be) and the only acting trustee of the trust, can H exercise a spousal rollover? (Please assume the trust passes all the see-through crud).
2)If the answer to 1) above is “Yes”, what procedure should I follow with the IRA custodian? Any PLR’s to qoute?
3) We also have a probate estate opened. I guess another option could be for the H to disclaim the IRA as trustee (he has the power to) and have the IRA proceeds then run through the estate of which husband is the only devisee in the will. Or….
4) Because H can claim certain stautory amounts in addition to his devise, could we just make a claim for the IRA proceeds as part of this amount (the IRA proceeds are less than the total amount he would be entitled to just for surviving!).
Any help would be appreciated.
All the best,
Rob Gilbreath
Permalink Submitted by Alan Spross on Tue, 2011-05-10 21:59
Hi Rob,
Bruce Steiner is best qualified to deal with this question, but for starters here is a copy of his 1997 article regarding post mortem strategies for getting an inherited IRA to the surviving spouse. In recent months, Bruce has indicated that the article remains applicable, despite the 1997 date. Note that on the final page of the article, there is an example similar to this one with PLR # listed. There is also a discussion with respect to applying a disclaimer approach:
http://www.kkwc.com/docs/AR20050125164755.pdf
The applicable state here may still present modifying factors or at least procedural challenges to get this done. Convincing an IRA custodian to set up an owned IRA pursuant to a rollover is a key challenge.
Permalink Submitted by Toby Hartley on Thu, 2013-10-17 18:34
I did not want to start a post all over when one has already been started. I know this is older post but does it stand?I have a producer who states his client has an IRA at Hartford that is owned by the trust as bene of her husband’s IRA. She is 73 and has taken RMD for two years now. To confuse me further he states it is not listed as a beneficiary IRA but rather just as an IRA with trust as owner and wife as annuitant. So, being the bene of the trust can she get this into her name as spousal rollover? She has another account of her own and I am worried that she could not aggregate the RMDs, which is the plan, unless they are both in her name.
Permalink Submitted by Alan - IRA critic on Fri, 2013-10-18 02:08
The article referred to above still stands. She cannot aggregate the trust RMDs with IRAs she owns. Her RMDs would be lower if she can roll the trust IRA to her own IRA, and the lower RMDs would start in 2013 if the rollover is completed by year end.