Can Designating a Trust as Beneficiary of Your IRA Reduce Income Tax?

by | Oct 24, 2022 | Inherited IRA | 38 comments




0:00 Will Designating a Trust as IRA Beneficiary Reduce Tax?
3:45 The Secure Act
4:56 SECURE Act Removed Stretch for Most IRA Non-spouse Beneficiaries
11:32 Example: 80-Year Old IRA Owner Dies with $1.5M IRA
16:06 What an Immature Traditional IRA Beneficiary Does
19:12 Responsible IRA Beneficiaries Tended to Only Take RMDs
22:50 Post-SECURE Act Distribution Strategy is Changing
26:50 What’s a Traditional IRA Owner To Do?
29:15 Naming a Trust as Traditional IRA Beneficiary
31:55 SECURE Act Penalizes Those Who Take RMDs

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38 Comments

  1. George M

    Great info! I will be sure to share this with my 2 daughters that will become beneficiaries subject to the Secure act.

  2. Richard Vaughn

    Can I designate my IRAs be transferred to IRAs that my son has had established?

  3. KentuckyLady

    how would a IRA taxes work with a special needs person who has only a SSI check? Thanks for all the great videos!

  4. Stevie Russo

    Exhausting yet thank you, understanding thers new rules! Need to learn more about creating a trust for the IRA!

  5. MaCoeur

    Ok…I think I heard you say that "Ben", who inherited his father's Trad IRA, is subject to RMDs on that inherited IRA (based on Ben's life expectancy) because his father died "after" his own required beginning date for taking RMDs….but that Ben "still" has to have all of the money out of that inherited IRA within 10 years. My situation is very similar…My father died at 88…had been taking RMDs for years…Left his IRA in equal parts to his four children….

    HOWEVER…It has been my understanding that there ARE no required minimum distributions for any of us four children…and that I (and my bro and sisters) can opt to spread the distributions out evenly over 10 years…or take it ALL out at any time whatsoever, as long as it's fully distributed by the 10 year deadline.

    I can't tell when you made this video, and I know there has been some confusion over what the rules "actually" are among all kinds of people. I'm not even sure the rules were fully settled until pretty recently (It's now 2022), but I decided to call the IRS and I was specifically told that I am not "required" to take any particular annual distributions from this inherited Trad IRA… But that I must have it fully taken by year 10 after my fathers death.

    Clarification?

    BTW, THANK YOU SOOOO MUCH FOR THE INFORMATIVE VIDEOS!!!! They're practically a life saver for those of us who really need the info.

  6. Peg K

    I learn something with each video. Thank you.

  7. JANET DEL CARMEN

    the information you give is needed to everyone

  8. Flower Face

    DONT KNOW IF ANYONE WILL SEE MY COMMENT..in time..
    My husband passed in Feb 2022. He had investment accounts.. stocks and fancy stuff like that. Our attorney opened up a Estate account at a bank I didn’t get to chose. And now he wants the funds from my husbands account closed and put in the bank he chose. Closing those accounts will force me to SELL HIS STOCK. I highly doubt my husband would have wanted that. Any feedback would be awesome. Oregon…

  9. Margaret King

    Mr. Rabelais, Do you still do the 15 minute phone calls you mentioned in another video?

  10. Eddie Adams

    Paul, I just watched your portability video from 2020. I'm repeating my comment here because I don't know if you go back and respond to comments on videos from years past.

    "Paul, I'm not following your analysis on this one. Facts: Barry dies in 2020 with a 6 million dollar estate. Wife dies in 2026 with a 17 million dollar estate. If wife elects portability in 2020, she gets Barry's 11.5 million exemption, but 6 million is used up, right? Otherwise, you're really giving her 17.5 million, 6 million in cash and 11.5 million in credit.

    So she only gets to port over 5.5 million in remaining credit along with the 6 million in cash. When she dies in 2026, her exemption is her 6 million plus Barry's 5.5 million in credit for a total of 11.5 million in exempt assets. If she had 17 million, her estate is still paying taxes on the difference, 6 million.

    For some reason, you gave her Barry's exemption at the full 11.5 million on top of the 6 million she received from him, giving her a total Barry exemption of 17.5 million."

  11. Life in Tornado alley

    I'm adopted and seen my parents will. Gotta love God children getting it all. I understand they're not my real family, nor would I want them to be. After living a white privileged life, and abuse to look good for cameras and presidents, I'm glad they're not including me. I just wanna see in person how ALL families act during a death…. killing each other over a dead person's belongings. All families do it. And none visit while they are alive, but somehow they have time to pick up stuff after they died no?

  12. Gastronomique

    Hi, an important question re wills. Im from Australia and yes different laws but the scenario is; my parents are living and in their 80’s. Both in reasonable health. They have a new will <2yrs ago. Plus power of attorney and medical power of attorney for medical reasons eg vegitative state or advanced dementia. I have a younger brother (him and I are the executors of the wills and have financial and medical powers of attorney jointly). Ok, so here it is. We have a sister, she has not spoken to my parents or my brother or me for at least 25 yrs. She has mental illness including OCD. She blames all her problems on my parents etc etc. Im sure you have heard it before. But – my parents insist on giving the estate split 40 | 40 | 20 with 20% going to my sister. My sister said many years ago she would just give it to a cat home and would refuses to take it. Ok, now my brother and I have the nightmare of a) tracking down her somewhere in Australia, b) approaching and getting on civil terms and c) executing the payment. Simply, a) I want nothing to do with her after the hell she has put the family through and b) i dont think she deserves the money after abandoning my parents, no help, and the grief she has put them through. It could keep the estate in limbo for years. I wonder if you could cover this in tour topics. Is a lump some fixed better say $30k? Her 20% could be $500,000 so its not a small amount. If not solved the government gets it! I particularly have sacrificed a big chunk of my life to help my parents. Is it better to convince them to change to will to leave her out? Or it that worse if she contests the will? Hopefully you could address these issues, thanks very much John in Sydney, Australia

  13. ravenlorans

    Who the Phuck are you and Why are you on my Recommended?

  14. firezonecrush999

    Hello Paul!I sent you a message,about 1 month ago,with my passed away aunts case.I live in Greece and she was American citizen,died in Greece. The case has some issues and I don’t know what to do…so you kindly told me to text you in a specific number.I did!via YouTube message,but I didn’t hade any replay…so can you please tell me how I can do it ,or if I can white you in an address,or if we can make a zoom meeting.If so,you must have in mind we are about 7-8 hours earlier here.I will appreciate any kind of help from you!cause I am in very deep waters here!! Thank you Alexandra Zochou

  15. cm Cm

    Can we hire you from another state

  16. stephen hines

    Oh I just want to know what the hell is going on because I get a text number from you saying that you wanna talk to me

  17. Diane Barron

    Thank you – Great This was the exact question I had about IRA

  18. Johany de la cruz

    How do I contact you ? Will like to get some advice regarding setting up a life insurance trust, will, etc

  19. Klg2knwme Klg2knwme

    You are amazing. Do you have an estate lawyer to recommend? I'm in the South Jersey area, about 25 minutes away from Atlantic City, New Jersey. I need help!!

  20. firezonecrush999

    Hello,I saw your videos resently and I have a question to ask you.I am from Athens Greece and my aunt,who is American citizen,borne in Greece,died on 9/25/2020,in Greece.There is a will and I am her only heir,until I take all the papers needed(I sent it twice),know they have the papers about 1 and a half months),maybe 2).With the virus,there was a lot of problems everywhere,my aunt didn’t pay her IRS and I told them to take any money needed and sent me the rest.Is this possible and can the BOA freeze the money,all though they know she’s dead and a specific person has her case,with protocol number? please can you tell me? I am far away and I don’t know what’s going on.P S I sent the papers,with her taxes,everything in Kansas Mo ,thank you sir Alexandra Zochou

  21. Yasin Nabi

    if you are not making money as passiv income, then you are missing the time out !…..

  22. Jen Jabba

    Here is a stumper… How to will assets to a genetic daughter that was adopted and not a US CITIZEN. So legally there are currently no ties. Only a possible DNA test. And. So she's not taxed as a non family member.

  23. stephen hines

    Haven’t seen you in a while are you OK

  24. Yolanda

    Please, need some advice. Mom 83 I am 58 Divorced and living with my Mom. I take card of my brothers needs who is mentally challenged He does not live with us and a Sister who has Mental issues. Mom refuses to get a Will or Living Trust. Home is paid off and she has not debt. Is there anyway I can protect myself?? I hate to think of going into Probate. Thanks

  25. Remy Racho-Rueca

    I am indecisive as to getting a trust or jus a will . Thank you

  26. mattmiklos

    Hi Paul my name is Matt from Pittsburgh Pa. Here's the situation. My father in law passed away in March at 92 . I am married to the youngest daughter of three daughters. Their mother passed away years ago at the age of 53. The father did remarry (we would assume that his second wife is the executor of his will) my wife and I don't know who is the executor. The middle sister has been saying that she has taken it upon herself to hire a lawyer, and is looking to be the executor. This sister is a control freak. She keeps blowing up phones with messages, trying to get my wife to sign a form that she has. The oldest sister is in spaceland..
    Sorry this is so long..we just don't know what to do

  27. Yard Mama

    Me Rabalis, did you text me today or is someone trying to scam me? I was trying to make an appointment with you.

  28. Fr1nc3sc41

    Too long, too spread out, too scattered, too many interruptive ads, and too many disruptions to the main topic. Focus! Either name a trust the beneficiary or not, advantages and disadvantages. Your viewers tune in to hear your bottom line answer.

  29. 916mbarnes

    Doesn't the trust pay 37% tax anyway over 13k of income, so the result of high tax is the same thing because it is an IRA?

  30. 408Home&Loan Inc

    What if the transitional IRA owns real estate? Is that mean the beneficiary has to sell the real estate within 10 years?

  31. Lars

    Zac has a very good idea and one I hope to apply. Overall, these videos are wonderful and very helpful to older viewers. Keep up the work and you will be blessed for certain.

  32. V B

    If I designate a grandchild (say age 10) as beneficiary of my IRA specifying a trust be established for him until age 21; does he therefore not need to withdraw any moneys until age 21 thereby giving the IRA/trust 10 years of tax free growth before the withdrawels begin ?

  33. Dee Dee Blair

    Great information .you explain things so well .I’ve watched several of these videos from different attorneys and your seminars are the best explained.

  34. Judy Fasola

    What is the name of the trust …to qualify for Medicaid….so heir doesn't have to go through probate… Irrevocable what …?… I understand that… revocable trust….. they can take home…. if go to nursing home ..

  35. lily mok

    What if the IRA is a trust?
    2 u.s. person beneficiaries, 3 Canadian ( non u.s. person) beneficiaries.
    Would and howthe u.s. beneficiaries be taxed after the owner of the trust passed away?
    What about for the Canadian beneficiaries (non us person)?

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