Revocable Trust as a contingent beneficiary designation on Nonqualified and Qualified Accounts - Good or Bad Idea?

[G-Man]

I'm trying to decide the best approach for defining contingent beneficiary designations on Nonqualified and Qualified accounts. I currently have a revocable trust.

Is it a good idea to designate the trust as the contingent beneficiary? Please provide the pros and cons of doing this.

Thanks

 

[MarieIG]

That might depend upon whom your other contingent beneficiaries would have been in lieu of the trust, and what you are hoping to accomplish.

 

[OldShooter]

Ask the attorney who drafted the rev trust. IIRC our attorney did have us designate our two rev trusts as beneficiaries but our situation and our pros and cons may be different than yours.

 

[Dash man]

Our attorney added some text to our trusts to support having our IRAs designated beneficiaries to be our trust. So speak with your attorney.

 

[Koolau]

Our attorney added some text to our trusts to support having our IRAs designated beneficiaries to be our trust. So speak with your attorney.

Suggest you run it by the Custodian/MF company - just to be sure they accept whatever you come up with.

 

[G-Man]

Thanks for all the feedback so far.

 

[Dash man]

Suggest you run it by the Custodian/MF company - just to be sure they accept whatever you come up with.

It’s Charles Schwab and their Trust department has a copy of Trusts since they will be Trustee when we’re gone.

 

[Kings over Queens]

Our attorney added some text to our trusts to support having our IRAs designated beneficiaries to be our trust. So speak with your attorney.

If you don't mind me asking, what general text was added, and why?

We're redoing our documents and this is one of the things I need to discuss with our attorney. My initial feeling is to have the deferred money bypass the trust, but have everything else go to it.

 

[Dash man]

I just reviewed our trusts and it’s too much to post here. It’s actually a separate trust designed for inherited IRAs. The contingent beneficiaries for our IRAs are these Inheritance trusts. The primary beneficiaries are my wife and I for each other’s IRA.

 

[G-Man]

I just reviewed our trusts and it’s too much to post here. It’s actually a separate trust designed for inherited IRAs. The contingent beneficiaries for our IRAs are these Inheritance trusts. The primary beneficiaries are my wife and I for each other’s IRA.

So, based on your comment, you will need to have language in the trust in order for your Nonqualified and Qualified accounts to define contingent beneficiary designations. For example, with Fidelity, there is a page where you define your primary and contingent beneficiaries for your accounts. It looks like in addition to that, you need language in the trust as well. Please advise.

 

[Dash man]

So, based on your comment, you will need to have language in the trust in order for your Nonqualified and Qualified accounts to define contingent beneficiary designations. For example, with Fidelity, there is a page where you define your primary and contingent beneficiaries for your accounts. It looks like in addition to that, you need language in the trust as well. Please advise.

It’s an IRA Inheritance Trust, a separate trust from our primary revocable trust, designed to protect the assets from creditors and judgements after funds are taken out of the IRAs for RMDs and taxes are paid.

 

[Rio2016]

A Revocable Trust is in the Social Security number of the person who sets it up and becomes irrevocable at death, and at death the Trust gets an IRS EIN number and has to file a tax return every year til it is depleted. The Trustee files the tax return.
My Fathers Trust, we did not put retirement accounts in the Trust. The retirement accounts transferred in kind according to the beneficiary designations per the attorney.
Putting retirement accounts in a Trust gets taxed differently and the rules are different.

 

[yclipse]

Our attorney added some text to our trusts to support having our IRAs designated beneficiaries to be our trust. So speak with your attorney.

This is the answer. The standard trust is not suitable for handling IRA distributions, for highly technical reasons. And the standard estate planning attorney is not suitable for the consult that Rio recommends.