Trust as beneficiary or is it the Trustee


I submitted a customized beneficiary designation ( for my IRA) to a Bank. The form designated the Trustee of the Shelton …. Family Trust as the beneficiary.

The Bank is stating that the wording above means that it is the individual who is the trustee that is the beneficiary and not the Trust. Is this true? I have no experience with Trusts.


Thanks


Shelton

Perhaps an alternate designation would be acceptable, e.g., John Jones, as trustee of the Shelton.... Family trust or just the Shelton Family Trust . You could also ask the bank for acceptable language as to the titling of the fiduciary who is the owner of the assets of the trust.

Maybe go for the whole enchilada....

John Jones (or his successor), as trustee of the Shelton ... Family Trust u/a dated March xx, 2002

There are other issues relating to the trust, e.g. To qualify as a designated beneficiary, it must meet the requirements of Prop Treas Reg § 1.401(a)(9)-4, A-5(B), A-6(a).

I use "XXX Family trust as created by Will". This leaves no doubt that the Trust is the beneficiary and I don't have to worry if the Trustee changes.

Alan: Why does the trust have to created by will? Since the IRA is a non probate asset which can be transfered at the death of the IRA owner to the beneficaries by operaton of law it seems to be rather cumbersome to subject the IRA to the delays of the probate process.

Shelton: upon review I think the bank is wrong since under state law a trustee is a fiduciary who has legal title to property but must act only for the persons who have a benefical interest in the trust. But if they wont budge then name the trust (XYZ Trust) as beneficiary.

The trust does not have to be created by will. That is just my personal scenerio. Also, since the trust immediately comes into effect upon my death (and that of my wife) then there is no probate as far as the IRA/retirement plan goes and everything goes into the Trust.