Naming Beneficiaries

[JohnDoe]

If I set up a trust fund for my child( 8 ), must I name the 2nd beneficiary of my retirement accounts the trust fund or my child? My wife is 1st beneficiary.

Do beneficiaries named on life ins and 401k/IRA's take precedence over a will?


If so, how can my executor distribute my proceeds based on my will?



Thanks.
JD

[Martha]

You can name the child as the beneficiary, but then the retirement account wouldn't go into the trust. If you want it in the trust you have to designate the trust as beneficiary.

Wills only pass along items not otherwise addressed. So if your life insurance and retirement accounts have named beneficiaries the assets never pass through the will and are unaffected by what the will says.

[Meadbh]

Quote:

Originally Posted by JohnDoe If I set up a trust fund for my child( 8 ), must I name the 2nd beneficiary of my retirement accounts the trust fund or my child? My wife is 1st beneficiary. Do beneficiaries named on life ins and 401k/IRA's take precedence over a will? If so, how can my executor distribute my proceeds based on my will? Thanks. JD

From personal experience as a beneficiary, executrix and testatrix, trusts are not included in your estate. Trust funds are settled independently of your will and are excluded from probate (which can be very helpful from a tax point of view). You could give funds to your child in trust or could bequeath them to him/her in your will, depending on personal preference. Just set up the two documents so that they articulate together to result in your targeted "postmortem asset allocation".

[JohnDoe]

Couple more questions...

What if I want 90% to go to my child and the rest to go to a few different people?

What if all 3 of us go at once, everything goes to the estate and is split based on my will?

How much info should I tell my trustee? I don't really want to reveal that the account would be over 1 million. I do have explicit instructions on how to distro the trust, though.

Thanks.

[Martha]

You are getting too complicated and I don't have enough facts.

I will say that most states have a set of rules about what happens when everyone "goes at once." There may be certain presumptions about who actually died first or that deaths were actually simultaneous. You will need to talk to your lawyer about what happens if you all go at once.

The specific instructions on how to distribute the trust need to be in the trust document. Your trustee doesn't necessarily need to know at this time how much money there will be in the trust.

I think it is time for a sit down with your estate planner.

[Nords]

Quote:

Originally Posted by Martha I think it is time for a sit down with your estate planner.

What Martha said.

Because IIRC an IRA in a trust cannot have its distributions stretched out over the life of the beneficiary. I don't have a reference or even remember the specific rule, but I have a clear memory of "IRAs in trusts: bad."

[aenlighten]

won't happen either. The court will intervene to establish guardianship and place it in their hands, so be sure to name a guardian.