IRA Trust, Inherited separate share account

Submitted by Linda Townsend on Thu, 2015-07-09 18:35

My client set up an IRA Trust and named her daughter as the trustee for her son’s share. The account is currently titled Client, deceased, IRA FBO Client IRA Trust FBO Son’s name, Daughter, Trustee. My question is, if the daughter doesn’t want to have anything to do with her brother any more, what is the procedure to get her name off the account as trustee so he can manage his own account? Further, can he simply retitle the account as the Client, deceased, IRA FBO Son, and forget that the IRA Trust was ever part of the mix?



Submitted by Alan - IRA critic on Thu, 2015-07-09 21:03

This is one for Bruce Steiner to address. However, I would think that the trust would contain provisions for the resignation of trustee, and how that trustee would be replaced. Perhaps the IRA owner established this trust because he did not feel that the son should have unrestricted access to the IRA account.

Submitted by Susan Milewski on Fri, 2015-07-10 21:26

I would like to purchase reals estate as an investable asset with residential real estate as opposed to a savings account IRA.  Can you explain how what the process is and how I structure it.  Thank you

Submitted by Alan - IRA critic on Fri, 2015-07-10 21:37

If you have a large enough IRA balance, and do not mind considerable added complexity, you can transfer your IRA to a self directed IRA custodian who will hold real estate in your IRA. You would then purchase a rental property with your IRA funds after carefully absording the rules on prohibited transactions. Your self directed IRA custodian can provide assistance in advising you of how your expenses such as insurance, taxes and repair bills must be paid solely from your IRA account, so you will need a considerable cash balance to address these contingencies. You must also maintain liquidity to meet your RMDs when the time comes. This forum is not meant for long detailed responses, and there are more factors to consider than the few mentioned here.

Submitted by Bruce Steiner on Fri, 2015-07-10 21:54

  • Alan is correct.  The Will or trust agreement should either name successor trustees, or say who gets to pick successor trustees. 

 

  • If the Will or trust agreement so permits, the trustees (other than the son) can terminate the trust and distribute the inherited IRA to the son.  However, by maintaining the trust, the trust assets will be kept out of the son’s estate for estate tax purposes, and will be better protected against the son’s creditors and spouses.

 

  • Bruce Steiner, attorney, NYC, also admitted in NJ and FL

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