Accumulation IRA trust — Limited power of appointment

Submitted by Norman Cook on Fri, 2019-02-08 20:10

An Accumulation IRA trust includes the following:

§ 02: I grant each primary beneficiary a limited power of appointment over that primary beneficiary’s Sub-Trust the power to appoint to any living descendants of themselves or blood descendent of my mother that is younger than the primary beneficiary such amounts and proportions and upon such terms, whether in trust or otherwise, as the primary beneficiary may appoint during his life by written notification to the Trustee or in his will by specific reference to this limited power of appointment.

Do any of you see any problems with this paragraph?

The age of the primary beneficiary will still be the one use for RMD?



Submitted by Bruce Steiner on Sat, 2019-02-16 23:32

  • In line 1, what is a “Sub-Trust?”
  • In line 2, “that” should be “who.”
  • If the beneficiary appoints in further trust, those trusts have to be subject to the same restrictions (no one older than the desired measuring life, and no one other than an individual or another trust subject to the same restrictions). This may be fixable after the IRA owner’s death.
  • The oldest child is likely to be a contingent beneficiary of all of the children’s trusts (if a child dies without leaving any issue and without exercising his/her power of appointment).
  • While some clients limit the class of permissible appointees to issue, the client may wish to permit his/her children to appoint in favor of their spouses  What if a child has a long and happy marriage to a stay-at-home spouse?  The class of permissible appointees would have to be limited to the oldest of the children and their spouses as of the IRA owner’s death.
  • Bruce Steiner


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