How to Name a Trust on an IRA Beneficiary
Naming a trust as a beneficiary for an IRA is a relatively simple process. Although it is impossible to house an IRA account inside a trust, most IRA owners can name a trust as beneficiary if they desire. There can be a number of advantages to doing so, although it can pose disadvantages as well.
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Instructions
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Create the type of trust that you wish to designate as a beneficiary to your IRA. In many cases, this trust will be a "pour-over" trust. This type of trust often remains unfunded until an event occurs, such as the death of the grantor. Then the assets from a source such as an IRA are poured into the trust.
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Contact your IRA custodian and notify them that you want to add your trust as a beneficiary. They should provide you with a list of the documents that you will need to furnish them to accomplish your objective.
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Complete your beneficiary designation or change form. Specify the full name of the trust that you are using. You will probably need to include a copy of at least the title and declarations pages of the trust. You may need to send in a full copy of the trust, depending upon various factors.
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Check with your custodian to ensure that the change or addition was made correctly. They will send you a beneficiary change form showing the change or addition in most cases. The full name of the trust should be listed as the beneficiary. Notify your custodian if you find any errors.
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Tips & Warnings
Using a trust as a beneficiary allows the IRA owner to use the conditions specified in the trust as parameters for the distribution of the trust assets that are not possible to specify for IRA beneficiaries.
Be aware of the possible disadvantages that come from naming a trust as a beneficiary. Since a trust is not a natural person, it does not have a life expectancy. This means that any payout option will be made according to the shortest possible schedule.
