Why Certain Trusts Can Be Designated Beneficiaries

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Only the most recent IRA beneficiary designations determine who inherits the account’s assets and how they are distributed, according to three IRS private letter rulings. Tax deferral and distribution options for IRA beneficiaries also vary based on their life expectancy, the timing of the IRA owner’s passing, and more.

IRS Allows Spouse to Roll Over IRA When Estate Was Named as the Beneficiary

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The Problem With Naming a Trust as the Beneficiary of an Annuity

An annuity with a trust as beneficiary must pay out according to the five-year rule—often with tax consequences due to compressed trust tax brackets. If control is the intent, a trust may be necessary, but a restricted payout option could be an appealing alternative in some situations.

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Naming a trust as beneficiary can be compelling for clients who want to control how their heirs use the assets. However, trusts can be limiting—especially as circumstances change. These three tips can help clients determine if a trust is the right solution for their estate-planning needs.