Disclosure Issues and IRA Trusts

• Author: Seymour Goldberg
• Profession: Senior partner in the law firm of Goldberg & Goldberg, P.C., in Woodbury, New York
• Pages: 101-106

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 distributions

from an IRA, or it can be a trust under a will.

The separate trust that I recommend is created during the lifetime of

the grantor and has all the terms that satisfy the IRS rules, including the

IRS regulations and IRS letter rulings, and the state trust laws. In addi-

tion, 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 example situations.

EXAMPLE

Scott, an IRA owner, creates a trust for the benet of Martha, his daughter.

He designates the Scott trust as the beneciary of his IRA. Scott is advised

101

DISCLOSURE ISSUES

AND IRA TRUSTS