Disclaimer of IRA to fund By Pass Trust

[Guest bmorr]

Wife is beneficiary of Husbands IRA. Living Trust is contingent beneficiary. IRA is in a single account at a broker.

Value of IRA is well beyond $650,000 estate tax exemption. Assets in Living Trust are only $600,000 of which half are applicable to Wife.

QUESTION:

Can Wife disclaim part but not all of IRA and thereby have the disclaimed part flow to the Living Trust and then into the By Pass Trust? Also Wwuld half or all of the disclaimed amount flow into the By Pass Trust. In the example given how much would have to be disclaimed to fully fund the By Pass Trust.?

Thanks for any help with this.

Bmorr

[Bruce Steiner]

The complexity here is caused by the use of the living trust.

By way of background, living trusts are oversold, overhyped and generally not necessary. They do not save taxes, and they generally do not significantly reduce the expenses of administering the estate.

What would happen upon a disclaimer would depend upon the terms of the living trust. But it shouldn't be difficult to name a credit shelter trust as the contingent beneficiary of IRA benefits.

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Bruce Steiner, attorney

(212) 986-6000 (NY office)

(201) 862-1080 (NJ office)

also admitted in FL