IRA Trust Beneficiary Tips Live From Ed Slott’s Elite IRA Advisor Group Workshop

Friday, May 01, 2015

By Jeffrey Levine, IRA Technical Expert
Follow Me on Twitter: @IRAGuru4EdSlott

Greetings from beautiful Denver Colorado, site of Ed Slott and Company’s Elite IRA Advisor Group Spring Workshop. Yesterday, during one of our breakout sessions, IRA trust expert Shannon Evans, JD, LLM, shared some key planning tips to consider when thinking about naming a trust as an IRA beneficiary. Here are just a few of those tips. For more information on Shannon Evans and her practice, you can visit her website here.

  • If you want to leave your IRA to a trust, then it should be left to its own separate, stand-alone trust that will only receive IRA and other retirement account funds.

  • There’s no specific dollar amount in an IRA that explicitly warrants the use of a trust. It all comes down to how much post-death control/protection an IRA owner wishes to incorporate into their plan. Obviously though, the larger a person’s retirement account, the more there is to protect.

  • An IRA trust should not provide for estate debts and expenses to be paid out of trust assets.

  • You need to be careful where a trustee lives, because it could create state income tax issues.

  • Be careful about naming a beneficiary of an IRA trust as the trustee of that trust, because it might reduce or eliminate the divorce and/or creditor protection of trust assets.

  • Legally speaking, step-children are generally not included as children, but adopted children are.

  • UTMA/UGMA accounts can be used to provide some control over inherited IRA assets, but IRA trusts are preferable because they can provide for control beyond the age of majority.

  • Decanting is a relatively new concept that allows a trustee to move funds from one irrevocable trust to another irrevocable trust, provided there is a good reason. The beneficiaries of the trusts generally have to be the same though. 22 states currently have decanting statutes.

 

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