What’s the Process When a Trust (or Estate) is IRA Beneficiary? – Ed Slott and Company, LLC (irahelp.com)

The recent article titled WHAT’S THE PROCESS WHEN A TRUST (OR ESTATE) IS IRA BENEFICIARY? by Andy Ives may contradict what a recent estate planner emailed over. Specifically, this part:

Account Ownership. When a trust or estate is named as IRA beneficiary, then the trust or estate is the beneficiary. The beneficiary is NOT the trust beneficiaries or the beneficiaries of the estate. We do not get to automatically disregard the trust or estate and set up an inherited IRA for any of those people (assuming they are people). In fact, we must set up a trust-owned or estate-owned inherited IRA. The trust or estate oversees the account – or more specifically, the trust trustee or the executor of the estate is in charge. For a trust-owned inherited IRA, the titling of the account might be something like: “William Smith, IRA (deceased June 1, 2021) F/B/O Adam Johnson, Trustee of The Smith Family Trust, beneficiary.”

We had a recent account that had a beneficiary listing of: “Spouse A & Spouse B Trust”.  We were instructed by our custodian to set up beneficiary IRAs in trusts created under the Living Trust, and obtain separate tax IDs for each trust. Example: Child #1 Trust c/u Spouse A and Spouse B Family Trust, In Bene of Related Descendant. We provided this information to the attorney, with her response below.

The Trust requires outright distribution to the beneficiaries if they demand it, and they have demanded it, but the distribution language of the Trust should not be [Custodians] concern, nor do they have a right to ask for it. Once [Custodian] has established [Trustee] authority to act as Trustee, they must rely on her instruction. [Trustee] has provided a Certificate of Trust under MCL 700.7913 to establish her authority. [Custodian] is legally obligated to follow [Trustee’s] instructions without asking for the Trust instrument. [Trustee] as Trustee has identified the beneficiaries and instructed [Custodian] to set up the inherited IRAs payable to each such beneficiary. [Trustee] as Trustee has the right to instruct this. Treasury PLR 2001503024 (attached) allows this to happen.

In your example, [Trustee] as Trustee directs what happens for each beneficiary, correct? If [Custodian] were to set up the accounts that they propose, [Trustee] as Trustee would just then direct that new accounts be set up for the individual beneficiaries. Why do we need a step in between? In all cases, [Trustee] is the Trustee and has the authority to direct this. There isn’t going to be income reported under any EINs under that scenario. She’s directing, right now as Trustee, that each beneficiary receives an inherited IRA with his/her equal share of the IRA. There is no requirement in the document that separate new trusts be created. In fact, [Trustee] has no right to do what [Custodian] is proposing when each beneficiary has demanded his/her share. She cannot keep the assets in the Trust or any trust. Complying with the trust, [Trustee] is directing that each beneficiary’s share of the Trust assets be transferred in kind to a separate inherited IRA for each such beneficiary.

Can anyone what Andy said and what the attorney is saying?