Online article by Merv Wilf about IRA beneficiaries (7/6/99); won't la

[Dave Baker]

http://www.riatax.com/weekly/pension.html (click) -- this is an online weekly excerpt from RIA's Pension & Benefits Week (a paid print publication)

[Bruce Steiner]

Merv Wilf's article is a bit confusing.

Where a trust is the beneficiary of an IRA, the IRA benefits will generally be payable to the trust over the life expectancy of the oldest beneficiary of the trust. For example, if an IRA is payable to a credit shelter trust, this will generally be the spouse's life expectancy; and if an IRA is payable to a trust for the benefit of a child and the child's issue, this will generally be the child's life expectancy.

This means that, by the end of the spouse's or child's life expectancy, the IRA benefits will have been distributed from the IRA to the trust, but *not* from the trust to the ultimate beneficiaries.

Where the trustees have a spray or sprinkle power, the measuring life should be the oldest beneficiary to whom the trustees can make distributions. In a credit shelter trust, this is generally the spouse; and in a trust for the benefit of a child and the child's issue, this is generally the child.

The power of appointment is the more difficult issue. I think the better result is to disregard the class of permissible appointees, although I know that this issue is not free from doubt. I wish that Merv Wilf's article were more persuasive on that point.

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Bruce Steiner, attorney

(212) 986-6000 (NY office)

(201) 862-1080 (NJ office)

also admitted in FL