[WSBAPT] SECURE Act and Disabled beneficiary/Special Needs Trust

[Marcus Fry]

Claudia:

I am a bit confused about the spigot question in to IRAs, means converting a trust from conduit trust to an accumulation trust and SNTs are rarely if ever conduit trusts (mandating IRA distributions to be distributed to the beneficiary).  Setting that aside, here is a link to a good explanation of SNTs and the Secure Act.  https://ncbarblog.com/the-secure-act-has-passed-how-does-it-affect-our-clients/.  This will be evolving as the dust settles.


Marcus J. Fry
Lyon, Weigand & Gustafson, P.S.
P.O. Box 1689
Yakima, Washington  98907
Telephone:  (509) 248-7220
Facsimile:  (509) 575-1883

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From: wsbapt-bounces at lists.wsbarppt.com [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of Claudia A Gowan
Sent: Wednesday, January 29, 2020 1:19 PM
To: wsbapt at lists.wsbarppt.com
Subject: [WSBAPT] SECURE Act and Disabled beneficiary/Special Needs Trust

Colleagues, I am struggling with drafting a Special Needs Trust where there is a possibility that the trust may be funded (in part) with an IRA.

I understand that the bene is an EDB under the SECURE Act. But, the question I have is this:

Where the Trustee of an SNT has the discretionary authority to 'turn the spigot' of funds off or on, assuming a valid reason to withhold funds, will turning the spigot off change the status of the beneficiary as an EDB to a non-EDB and subject the IRA to the 10 year rule?

I am concerned that it would have this effect. I know the SECURE Act is new but I am hoping some of you skilled in disability planning may have some insight. Perhaps it would be better to simply avoid funding the trust with IRA assets for now, which isn't always possible.

Thanks much.

Best, Claudia


Claudia A. Gowan

Claudia A. Gowan, PLLC
1001 Fourth Avenue, Suite 3200
Seattle, WA 98154
(206) 443-2733 (T)
claudia at cagowanlaw.com<mailto:claudia at cagowanlaw.com>

www.seattletrustsandestates.com<http://www.seattletrustsandestates.com/>

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