[WSBAPT] Gift of Traditional IRA to Juridical Entity

[Heather deVrieze]

I often find it quite easy for the client to split their IRA into two accounts with the same financial institution, name child as beneficiary of one and nonprofit as beneficiary of other. They can adjust their distribution plan by moving funds between accounts, choosing which account to take their RMD from, etc.

Heather

Heather S. de Vrieze
Attorney-at-Law
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From: wsbapt-bounces at lists.wsbarppt.com [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of David Faber
Sent: Tuesday, June 27, 2017 11:56 AM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: [WSBAPT] Gift of Traditional IRA to Juridical Entity

List:

I'm trying to understand how much flexibility I can bake into a trust arrangement for a client who wishes to leave a portion of their traditional IRA to a nonprofit entity and the rest in trust to the client's child. IRC  § 1.401(a)(9)-4 of course does not allow juridical entities as possible contingent beneficiaries of a qualified retirement plan account, but am I right in assuming that provided the client splits the QRP into separate tranches at the time of their death, any portion that is directed to an individual beneficiary (with proper contingent beneficiary language) would be able to be stretched irrespective of the gift to the juridical entity? Also, would you advise I have the beneficiary designation deal with the carving up of the QRP directly or should I have the trustee tackle that issue within the confines of trust instrument? I am leaning toward the former, but understand that there are sometimes pitfalls around plan administrators properly addressing the renaming and segregation of accounts.

Best,
David J. Faber
Faber Feinson PLLC
210 Polk Street, Suite 1
Port Townsend, WA 98368
(360) 379-4110

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