Trust as primary, kids contingent?

Submitted by [email protected] on Wed, 2017-11-22 13:24

Husband (74) has $1M+ IRA. He wants to limit his spouse’s access to RMD distributions only when he passes. I understand a properly drafted Trust can easily accomplish this. My question is when the spouse passes, will naming their 3 kids as continegent beneficiaries retain stretch options? Another option may be to include language n the Trust for when the spouse passes.

Any comments on this?



Submitted by Bruce Steiner on Wed, 2017-11-22 21:18

  • The stretch will, at best, be limited to the spouse’s life expectancy.  If there’s some reason not to let the spouse control the IRA, he may wish to consider leaving other assets in trust for the spouse and the IRA to or in trust for his children.  
  • There’s probably no relationship between the RMDs and the amount he wants her to receive.  The RMDs will become large in the later years.  Why should the limit on distributions be tied to the RMDs?


Submitted by [email protected] on Sun, 2017-11-26 14:28

Thanks for the response Bruce.The reason to limit the spouse’s access to distributions is that H wants to ensure all 3 children are treated equally.  Unfortunately, he is rightfully concerned his spouse will significantly favor 1 over the other 2.  H has major health issues, and probably won’t live more than 2 years. It could make sense to make the 3 kids primary, or the spouse and 4 kids, which would meet the goal of preserving the stretch for each plus ensuring the kids are treated equally.



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