Trust as beneficiary

[Guest andmik]

This is a new one to me.

Participant dies and named beneficiary receives the account balance established within the plan in the beneficiary's name.

Apparently the beneficiary intends to leave the account balance in the qualified plan of her deceased spouse for awhile, but wants the account to be in the name of a trust rather than her own name. I have not run into this set of facts before and find nothing on point.

Any insight you all might provide as to whether this seems like an acceptable act will be appreciated.

Thanks, andmik

[alanm]

I don't think you can because a trust can benefit other people other than the owner of the account, which in this case is a spouse. This could be a disguised gift or tranfer. You can name a trust as a beneficiary however and this should accomplish what the spouse wants.

[QDROphile]

As always, you need to check plan terms the plan. The plan might not allow trusts to be designated as beneficiaries. The plan might not allow beneficiaries to designate beneficiaries.

[lkpittman]

Wouldn't this be a prohibited assignment of benefits? I think the account would have to be in the name of the spouse, who is now the account owner. Whether she can now designate a beneficiary is another matter--a designated beneficiary would not be named on title to the account . . . .

[Guest andmik]

I want to thank you for the replies,

I agree now that this is the result. Placing the account in a trust rather than the spouse's name would fall under the anti-alienation clause. The trust could name others rather than the spouse either immediately or over time and therefore creates an alienation violation.

I would also agree that the spouse could name a trust as a beneficiary.

I appreciate your responses to my inquiry.

andmik