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IRA Decedent named his Living Trust as his beneficiary


RayJJohnsonJr
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I'm concerned about the taxation of this beneficiary designation. I don't know why, but the IRA owner named his Living Trust as his IRA beneficiary. There is no language in the Trust addressing the receipt of IRA money or discussing the creation of an Inherited IRA or giving the Trustee the right for the Trust to disclaim the IRA proceeds. The Trustee of the Living Trust is the son of the decedent, he son is age 50, the decedents only child, and he is the sole beneficiary of the Trust.

What happens when these IRA proceeds are paid to the living Trust? Will the Trust owe the income taxes? It's a traditional IRA and is fully taxable.

Thanks.

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I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.

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It may not be the most tax efficient beneficiary designation, but maybe the IRA depositor's primary goal is (was? is he already a decedent?) controlling his son's access to the money, bad tax result notwithstanding, and the terms of the trust effectuate that intent.

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Yes, the IRA depositor is recently deceased. The Trust provides the son virtually unlimited access to the trust assets. What I would like to find out is if the IRA proceeds will be taxed on the decedent's final 1040, since the Living Trust is just a pass through Trust and carries the tax ID which is his (the decedent's) Social Security number. It seems like the IRA Custodian is going to 1099-R the beneficiary, the Trust. Could this be a blessing in disguise? The decedent's tax bracket will be much lower than the son's, the son is a successful physician probably in the maximum tax bracket.

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