The "look through" trust can affords long term IRA deferrals and special protection or tax benefits for the family. But, as with all specialized tools, you must use it only in the right situation. If the IRA participant names a trust as beneficiary, and the trust meets certain requirements, for purposes of calculating minimum distributions after death, one can "look through" the trust and treat the trust beneficiary as the designated beneficiary of the IRA. You can then use the beneficiary's life expectancy to calculate minimum distributions. Were it not for this "look through" rule, the IRA or plan assets would have to be paid out over a much shorter period after the owner's death, thereby losing long term deferral.
A Tennessee Irrevocable Trust as a Designated Beneficiary of an Individual Retirement Account refers to an estate planning tool that allows an individual to name a trust as the designated beneficiary of their retirement account. The trust is created in accordance with Tennessee state laws and is used to provide financial security and flexibility for the account holder and their designated beneficiaries. There are several types of Tennessee Irrevocable Trusts that can be designated as beneficiaries of an Individual Retirement Account (IRA). These include: 1. Revocable Living Trust: This type of trust allows the granter to retain control over the assets during their lifetime, and it becomes irrevocable upon their death. As a designated beneficiary of an IRA, a revocable living trust provides flexibility in estate planning, allowing the granter's beneficiaries to receive the IRA proceeds based on the trust's distribution provisions. 2. Testamentary Trust: Unlike a revocable living trust, a testamentary trust is created through a will and becomes effective after the granter's death. This type of trust can be named as the designated beneficiary of an IRA, enabling the granter to control the distribution of their retirement account assets and provide for their beneficiaries according to specific instructions. 3. Special Needs Trust: A special needs trust is designed to support individuals with disabilities while preserving their eligibility for government benefits. By designating a special needs trust as the beneficiary of an IRA, the account holder can ensure that their loved one with special needs receives financial assistance without losing government benefits like Medicaid or Supplemental Security Income (SSI). 4. Spendthrift Trust: A spendthrift trust includes specific provisions to protect the trust's assets from the beneficiaries' creditors. By naming a spendthrift trust as the designated beneficiary of an IRA, the account holder can safeguard the retirement account proceeds from potential creditor claims or lawsuits against their beneficiaries. 5. Charitable Remainder Trust: This trust allows the account holder to donate their IRA assets to a charitable organization while retaining income for themselves or their designated beneficiaries for a specific period. Designating a charitable remainder trust as the beneficiary of an IRA can provide both philanthropic benefits and potential tax advantages for the account holder and their beneficiaries. In conclusion, a Tennessee Irrevocable Trust as a Designated Beneficiary of an Individual Retirement Account offers various types of trusts to meet different estate planning objectives. These trusts provide control, protection, and flexibility in distributing the retirement account assets to beneficiaries while adhering to the state laws and regulations.
