IRA Bypass Distributions

[Guest DAW]

Understand on an IRA in the Bypass, RMD are distrubted to the Trust on the life expectancy of the oldest beneficiary.

Is the surviving spouse by definition going to be considered the oldest

beneficiary, or is there a way in framing the Bypass Trust language to only

use the children for determination of oldest?

If we use surviving spouse, and there life expectancy is 10 years and they only survive for six, I assume that the Trust has four more years to take distribution.

Is there any way the children at survivor's death can inherit the IRAs and

take distribution over their own life expectancy?

[Mary Kay Foss]

If the Surviving Spouse is a beneficiary of the Bypass Trust he/she will be the measuring life. It's possible to have a Bypass Trust where the spouse is not a beneficiary but if you're going to do that why have a trust? The IRA sould be left to the kids directly.

You are correct in saying that the survivor's actual life expectancy doesn't diminish the time period for RMDs to the trust.

The children are only able to use their life expectancies at the death of the survivor if the IRA is not left to the Bypass Trust but instead is left to the survivor who rolls it over and names the kids as beneficiaries.

[Guest DAW]

Appreciate your reply and knowledge. At this point, I would only put an IRA in the Bypass if it was absolutely necessary for estate tax reasons, and the survivor did not want to disclaim to the beneficiaries.

One last thing. Are you or any one else up on the concept of Power of Appointment? Most of the trusts I work with are Rev. Living Trusts and I've been told by several attorneys that the RLT Bypass doesn't qualify as a conduit for the IRA because the trustee has too much control over the distributions. Does that sound familiar? What about if we have an A Trust and the sole trustee dies leaving the A Trust as beneficiary? My thoughts are that since the trustee is deceased and the custodian will deal with each of the beneficiaries as their own inherited IRA, that this issue of Power of Appointment would be moot. Any opinions?????