trusteed IRA
I have a client with a $1 million IRA, he wants to make a trust beneficiary.
The money is to be used for income to his second wife during her lifetime.
After she passes have the trust distributed to his children from a previous marriage.
At his death is his IRA fully taxable?
How do I set up the trust in order to protect the interest of the children after he is deceased.
Permalink Submitted by Alan - IRA critic on Mon, 2017-06-19 19:40
He should talk to a trusts and estate attorney. A QTIP trust would control distributions to the spouse so that IRA assets would remain for his children unless the spouse was relatively young. However, RMDs from the IRA would be considerably higher due to use of the single life table rather than the Uniform Table. In other words, IRA RMDs would be higher, but there would also be a limit, usually the internal income of the IRA to the amount distributed annually from the IRA.
Permalink Submitted by Bruce Steiner on Tue, 2017-06-20 03:14
See my article on this subject in the March 2004 issue of BNA Tax Management’s Estates, Gifts & Trusts Journal: https://www.elderlawanswers.com/Documents/Trusts%20as%20Beneficiaries%20of%20Retirement%20Benefits.pdf .