Trust Strategy
Decedent’s Trust holds $100,000 of cash and is sole death beneficiary of decedent’s $100,000 TIRA.
Trust beneficiaries are 50% to adult child and 50% to charity.
What steps/strategy can Trust employ to result in $100,000 of TIRA income being taxed to charity (essentially avoiding any income tax) and no taxable income to Trust or adult child beneficiary?
Permalink Submitted by Alan - IRA critic on Tue, 2023-10-24 18:03
That’s not possible. Usually, the trustee of the trust would request an inherited IRA for the charity to be distributed out of the trust and the charity could then cash it without tax liability, and the child’s share would be taxable when distributed either to the child or to the trust if the trust was an accumulation trust and control of the funds was an issue. RMDs depend on whether the trust is qualified for look through and whether the IRA owner passes prior to RBD or after.