Estate as Primary Beneficiary of IRA
Client had their Estate as Primary bene of Trad IRA. He died at age 75. Client’s attorney wanted public record of estate, not my idea!!! His pour over will directs the funds to a Trust. The Trust has named bene’s (his 2 children). I have asked numerous estate planning attorneys on their opinion and all have different takes. My question is; What RMD schedule will be used? 1) Oldest life expectancy of his 2 children whom are bene’s of the Trust and was funded by 9/30 of year after death therefore following rules as if trust was Qualified or 2) use IRA owners age as of birthday in year of death reducing by 1 in subsequent years since his estate was primary beneficiary and movement to Trust was irrelevant and cant be considered for more tax efficient RMD stretch.
Permalink Submitted by Alan - IRA critic on Sat, 2017-12-16 02:16
The latter. Since the trust was not named as the beneficiary on the IRA beneficiary clause, it will not be treated as qualified or eligible for look through treatment. Therefore, client’s estate is the beneficiary and RMDs must be based on the age of the decedent using Table I as explained in your companion thread. Further, per state law the amount of assets passing through the pour over will determine if the pour over will is subject to probate. The IRA should still be able to be transferred in kind to the trust, but that does not change the RMD treatment.