Reader Question – Inheriting Trusts & IRAs

Reader Question – Inheriting Trusts & IRAs

I recently received a question from a reader, who I will refer to as TPS.  TPS contacted me through my contact me page – if you have a question feel free to use it!

TPS seems to be very confused, so rather than just answer the question I will post it so he can reply here.

Your website is most informative. Thanks!. My estate planners are not very helpful regarding inherited trusts. Can you tell me who I might expect to accept Inherited IRA’s with the trustee a person other than the beneficiary? Also, since I cannot create this trust until it is funded, how can I arrange through my living trust to have it created after my death? If I can do this in the living trust, must it be specific re. custodian? If I specify a specific single investment, what would be reasonable custodian charges? I really appreciate any help you may provide.

First of all TPS thank you for finding my website ‘most informative.’  Second, my little old blog is not a replacement for your estate planners, so if they aren’t meeting your needs press them for some straight answers!  With that in mind, take a look at my disclaimer – nothing discussed herein should be construed as legal or financial advice as I have no idea about your personal situation.

Most of these questions seem to arise from my post “Naming a Trust as Beneficiary of an IRA.

Who might accept Inherited IRAs with an Independent IRA

I think TPS’ first issue is – What Broker is willing to be custodian of an IRA controlled by a Trust?  To this, I am not sure but a quick google search I found that:

Further, I know my broker-dealer has easy to find paperwork.  So, TPS I don’t think you will having trouble finding a custodian that will fit your wants and desires.

How Do I Reconcile my Living Trust and a Conduit Trust which is Beneficiary of an IRA

This one needs more info about your set up than I am willing to take as I am not your legal counsel, but we can talk in generalities.  A Living Trust is a tool to avoid probate, and if it is your main estate document it can be the recipient of an IRA if you follow the rules in the above post in a separate section.  So your IRA’s Beneficiary can be a certain section in your Living Trust which is created to handle a qualified account.

The custodian of your living trust after you are dead, will be decided by the Trustee.  The Trustee know controls the assets in these trusts – you can not control since you are dead.

Finally, the custodian fees would be decided, by the custodian.  I think fidelity charges $50 a year or something, but nothing too significant.

TPS – I hope this cleared some questions up for you!

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