Appendix VI. Disclosure Issues and IRA Trusts

• Author: Seymour Goldberg
• Profession: Senior partner in the law firm of Goldberg & Goldberg, PC in Woodbury, New York
• Pages: 169-175

APPENDIX VI

DISCLOSURE ISSUES

AND IR A TRUSTS

169

An IRA trust is a different type of trust that is not a form book type of trust.

It can be a separate trust that is dedicated to the receipt of distribu-

tions from an individual retirement account (IRA), or it can be a trust

under a will.

The separate trust that the author recommends is created during the

lifetime of the grantor and has all the terms that satisfy the Internal Rev-

enue Service (IRS) rules, including the IRS regulations and IRS letter

rulings and the state trust laws. In addition, the separate dedicated trust

can be a dedicated revocable trust or a dedicated irrevocable trust. It is

best to use a dedicated irrevocable trust for creditor rights protection

purposes. An irrevocable trust is not an irrevocable beneciary.

No matter what, the IRS post-death trust documentation requirement

must be timely satised with the IRA institution by no later than October

31 following the year of death of the IRA owner.

After the death of the IRA owner, the trustee must le annual du-

ciary income tax returns with the IRS and the state if duciary income

tax returns are required.

In the event that the IRA trust is not a qualifying IRA trust, then there

may be signicant problems for the trustee, trust beneciary, trust attor-

ney, and trust accountant.

The disclosure issues involving IRA trusts are best illustrated by the

following examples:

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