Pass through Trust IRA
a trust inherits an IRA and the trust names a son and daughter as beneficiaries. Does it make sense to or can you open a beneficiary IRA under the name of the son and the daughter and transfer their portion from the trust IRA to their Inherited IRA in order to avoid the 37% estate tax?
Permalink Submitted by Alan - IRA critic on Tue, 2020-11-03 00:51
The estate tax exemption this year is 11.58mm and the rate in excess of that is 40%. If a trust inherits the IRA the entire death valuation of the IRA is included in the estate, although values given to charity will be deductions. It does not make any difference in the federal estate tax should the trust provisions allow for distributions of the IRA out of the estate to trust beneficiaries.