Titling A Current IRA Beneficiary Form | Ed Slott and Company, LLC

Titling A Current IRA Beneficiary Form

I reached 701/2 in 2007 and must take RMD by 12/31/2007. My primary beneficiary is my spouse (age 62) and the contingent beneficiary is my revocable living trust (A-B Trust). The Trustee of the Living Trust is myself and my spouse and after we are bothdeceased the successor trustees are our three children set up for equal distribution. Should I create a NEW trust indicating the above desires or just change the IRA beneficiary form with my broker to reflcect that I wish my spouse to be the primary beneficiary and my three children to be contingent beneficiaries equally? Thank you Patrick McDonald

What are you trying to accomplish? If you want your children to take outright if your wife does not survive, then you should name your children as the contingent beneficiaries (with provisions for the issue of a deceased child, if desired). If you want your children to take in trust rather than outright if your wife does not survive, then you should name trusts for the benefit of your children as the contingent beneficiaries (with provisions for the issue of a deceased child, if desired). We generally recommend providing for children in trust rather than outright, unless the amount involved is too small to warrant administering a trust. Providing for children in trust rather than outright better protects the children's inheritances against potential creditors (including spouses), and keeps the inheritances out of the children's estates for estate tax purposes. There are other possibilities as well. The "A" and "B" trusts won't come into play if your wife does not survive you. The term "A trust" was commonly used many years ago to describe what we would now call a marital or QTIP trust, and the term "B trust" was commonly used many years to describe what we would now call a credit shelter or bypass or family or nonmarital trust. But these trusts will only be created if your wife survives you. You may wish to consult with competent tax/estates counsel, who can give you specific advice based upon your particular situation and your objectives. Bruce Steiner, attorney NYC also admitted in NJ and FL
 

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