Friday, January 26, 2018
There are many individual taxpayers who have accumulated significant wealth in their traditional or Roth IRAs. These assets can be paid out to a particular beneficiary, or they can be paid out to a trust, which offers multiple benefits for asset protection and estate planning purposes. If the IRA death benefits are made payable to a trust, the beneficiary may be able to enjoy a longer payout period. Also, benefits paid to a trust can offer protection from creditors and lower tax rates. There are some known situations where an IRA trust was drafted without proper consideration of all pertinent IRS rules. Such oversight on the part of the planner can result in adverse tax consequences for a client. In order to avoid such pitfalls, it is incredibly important for estate planners to become very familiar with the IRS rules regulating these trusts.
See Seymour Goldberg, IRA Trusts After the Tax Cuts and Jobs Act, CCH, 2018.