Trust Income & final distribution

Our client’s attorney is drafting a conduit IRA trust. I have three questions:

1. They state that the RMD must be passed through to the beneficiaries. Do they also need to state the RMD is the income?
2. This is a spendthrift trust so the client does not have a provision for health, maintenance and support. Still she wants something paid to daughters if there is another 2009. Can she insert something like “the beneficiaries receive the higher of at least 5% of the IRA or the RMD? Do you have any other ideas?
3. When the beneficiary children are deceased the trust continues paying RMD to the grandchildren. If they are over age 30, the trustee can distribute the IRA to the respective grandchild. Rather than a distribution, can this be changed to a distribution or transfer to the granchild’s Inherited IRA outside the trust?

Many thanks as always … Mary



You posted a similar question on February 23, 2012. See my response to that one.



Natalie Choate’s book “Life and Death Planning for Retirement Benefits” has an entire chapter on Trusts as IRA beneficiaries. If your client’s attorney does not have a copy, he should obtain one. Her website offers the book for sale. All of the things that you want to do are discussed in that chapter. She has suggestions for drafting the trust as well as some sample forms to have shares of the trust distributed to inherited IRAs.



Thanks for the post. Its a great information.



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