Permalink Submitted by Bruce Steiner on Sun, 2012-12-30 18:47
It doesn’t matter whether it should. It can’t. Actually an IRA is its very own revocable trust.If you’re considering creating a revocable trust (other than your IRA), keep in mind that revocable trusts are overhyped and oversold, and in most cases, except perhaps in a few states, not worth the effort.
Permalink Submitted by mk foss on Mon, 2012-12-31 22:30
Bruce is correct, a trust cannot own an IRA. A trust can be the beneficiary of a traditional IRA but you would only choose this option in very limited circumstances. Why would you want the IRA in a trust?Sometimes a trust will be used when the beneficiary is a minor and the IRA owner is concerned that the beneficiary would take a distribution of all of the benefits once they are no longer a minor. That’s the reason most often for using a trust as a beneficiary. With responsible adult beneficiareis, a trust is only recommended in very rare circumstances.
Permalink Submitted by Bruce Steiner on Tue, 2013-01-01 13:47
We often name trusts for children and grandchildren as beneficiaries regardless of age. It keeps the assets out of the beneficiary’s estate for estate tax purposes, and protects against the beneficiary’s potential creditors, including spouses. See my article on this subject in the March 2004 issue of BNA Tax Management’s Estates, Gifts & Trusts Journal: http://www.kkwc.com/docs/AR20041209132954.pdf .
Permalink Submitted by Bruce Steiner on Sun, 2012-12-30 18:47
It doesn’t matter whether it should. It can’t. Actually an IRA is its very own revocable trust.If you’re considering creating a revocable trust (other than your IRA), keep in mind that revocable trusts are overhyped and oversold, and in most cases, except perhaps in a few states, not worth the effort.
Permalink Submitted by mk foss on Mon, 2012-12-31 22:30
Bruce is correct, a trust cannot own an IRA. A trust can be the beneficiary of a traditional IRA but you would only choose this option in very limited circumstances. Why would you want the IRA in a trust?Sometimes a trust will be used when the beneficiary is a minor and the IRA owner is concerned that the beneficiary would take a distribution of all of the benefits once they are no longer a minor. That’s the reason most often for using a trust as a beneficiary. With responsible adult beneficiareis, a trust is only recommended in very rare circumstances.
Permalink Submitted by Bruce Steiner on Tue, 2013-01-01 13:47
We often name trusts for children and grandchildren as beneficiaries regardless of age. It keeps the assets out of the beneficiary’s estate for estate tax purposes, and protects against the beneficiary’s potential creditors, including spouses. See my article on this subject in the March 2004 issue of BNA Tax Management’s Estates, Gifts & Trusts Journal: http://www.kkwc.com/docs/AR20041209132954.pdf .