inherited trust IRA - successor beneficiaries | Ed Slott and Company, LLC

inherited trust IRA - successor beneficiaries

After I pass away, my IRA will go into two separate retirement trusts for my two sons. The trust stipulates that their successor beneficiaries will be their children and then each other. When my sons inherit the IRA trusts, can they bypass the trust beneficiary instructions by naming their own beneficiaries on the bank forms in their wills? Thank you!

The trustee of the trusts will have to follow the trust provisions regarding how much and what type of discretion the trustee will have. If they are allowed to terminate the trust, the inherited IRA could be assigned to the trust beneficiaries, who would then have authority to name their own successor beneficiaries and manage their own inherited IRAs. On the other hand, doing that will eliminate any creditor protection the trust provides with respect to ex spouses and certain other litigants. Otherwise, the trust becomes irrevocable upon your death and the trustee must adhere to the trust provisions. Also, unless a child is disabled or chronically ill, they will likely be subject to the 10 year rule whether you leave the IRA to a qualified trust or outright to the children.

Do the trusts give them powers of appointment?


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