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October 29
Documenting an Applicant's Intent to be a Joint Applicant;
David Dickinson

November 4
Issues with Deceased Customers;
Mary Beth Guard and John Burnett

November 5
Vault Burglaries, Floods, Fires & Other Disasters;
Dave McGuinn

November 6
MLO v LO - Who Has to Do What?;
Jack Holzknecht and Mary Beth Guard

November 13
Domestic Violence & Workplace Violence: There Is A Link;
Shelly Collins and Dana Turner

November 18
Understanding USPAP and Regulatory Guidelines for Appraisal and Evaluation Compliance Reviews;
Eric Collinsworth



Topic Options
#587812 - 07/24/06 05:48 PM Can IRA Beneficiary be Testamentary Trust?
BBoyd Offline
Diamond Poster

Registered: 03/04/02
Posts: 2395
Loc: MI
Help! A customer has requested that his IRA beneficiary be his testamentary Trust established by his will upon his death. I'm thinking that can't be done, as the Trust doesn't exist at this point in time, and has no Tax ID number (I believe it would have an EIN upon his death). Am I correct?
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Opinions are mine and never to be taken as legal advice!

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Deposits and Payments
#587813 - 07/24/06 07:41 PM Re: Can IRA Beneficiary be Testamentary Trust?
JustASquirrellTryinToGetANut Offline
Member

Registered: 06/14/06
Posts: 72
Check this out, it goes into this issue in great depth.

http://www.thestreet.com/funds/taxforum/627288.html

As far as I can gather it is acceptable to name your trust as beneficiary as long as it is valid at the time it is appointed.

Of course if your IRA says that Granny Bumpkins gets the proceeds and the will says Uncle Fester gets it then the IRA wins!

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#587814 - 07/24/06 07:53 PM Re: Can IRA Beneficiary be Testamentary Trust?
BBoyd Offline
Diamond Poster

Registered: 03/04/02
Posts: 2395
Loc: MI
Thank you! This was very helpful, with the key being "The trust must be valid under state law." If the Trust doesn't even exist until a person dies, I would think the Trust isn't valid to be named as beneficiary.
_________________________
Opinions are mine and never to be taken as legal advice!

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#587815 - 07/25/06 06:52 AM Re: Can IRA Beneficiary be Testamentary Trust?
Ken_Pegasus Offline
10K Club

Registered: 08/30/01
Posts: 17478
Loc: Another trip around the sun
The article is very good and makes it clear that a trust established during the lifetime of the decedent could be the beneficiary of the IRA. I have seen people establish such a trust and fund it with $1. However, as you note, in this instance the testamentary trust and the passage of the IRA funds by operation of law would both take effect at the moment of death. I'm just not certain it will work, but your bank must be certain when it comes time to make the payment.

Talk to your bank's attorney and see if he thinks you should require an indemnification and hold harmless agreement with the customer regarding the beneficiary designation. Know that the other attorney will be indignant at any suggestion that the plan is not perfect, so your attorney may need to do a little research before you bring it up. It's an issue of state law, not the Internal Revenue Code.
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The world is not a wish granting factory. Hazel Grace Lancaster

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#587816 - 07/25/06 08:27 AM Re: Can IRA Beneficiary be Testamentary Trust?
BBoyd Offline
Diamond Poster

Registered: 03/04/02
Posts: 2395
Loc: MI
Thanks, Ken!
_________________________
Opinions are mine and never to be taken as legal advice!

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