Beneficiaries for IRA: In children's names or in the name of the trust I have set up for them?

[Anonymous]

Are your children minors or do you feel the need to put restrictions on the money after your pass? If yes, go for the trust. If not, then name your children. But keep the 10 year rule in mind if you are in retirement and are drawing down your assets.

[Anonymous]

Anonymous wrote:Probate is a huge deal. Simplify it all before you pass.
How old are the children? Like adult children?
How much money?
If you have a lot, pay the advisor/lawyer to clear it all up. If you don't, why are you even wasting money and time on advisors and trusts. Make the kids beneficiaries. Or even better, start giving money away already now.
We received a traditional IRA and Roth IRA for a minor child sent straight to the other parent to manage. The rest of the money sits somewhere in estate account.
Depends of the state, the age of the children, the bank, the amount and who knows that else. Robinhood did not allow minors as beneficiaries.

Thanks for all this!

[Anonymous]

Anonymous wrote:

Anonymous wrote:How old are the children? If you want to control access beyond the grave (in addition to the tax restrictions), the trust would be better?

Yes, thats what I want. Protect from divorces/creditors all that. So I do think trust will be better, thanks. Trying to figure out what I'm missing that he thought it wouldn't.

You will only protect them for so long, but maybe it’s worth it. At some point when they hit a certain age they will likely become the trustees and then can do whatever they want.

Best thing is to sit them down when they are adults and explain the reasoning for the trust and why they shouldn’t dissolve it even when they can. Of course you want to make sure the trust is very flexible and they can pull out the earnings/income fairly easily.

[Anonymous]

Mine goes directly to my children because they could stretch distributions over their lifetime and avoid the 10-year distribution, which would cost more in taxes.

[Anonymous]

Anonymous wrote:Mine goes directly to my children because they could stretch distributions over their lifetime and avoid the 10-year distribution, which would cost more in taxes.

ummm....when's the last time you reviewed that decision with an expert? because i think that rule changed in 2020, so your children will still be subject to the 10 year rule. You might want to look into that!

[Anonymous]

Anonymous wrote:

Anonymous wrote:Mine goes directly to my children because they could stretch distributions over their lifetime and avoid the 10-year distribution, which would cost more in taxes.

ummm....when's the last time you reviewed that decision with an expert? because i think that rule changed in 2020, so your children will still be subject to the 10 year rule. You might want to look into that!

+1. Once the minor kids turn 21, they are subject to the 10 year distribution rule.

[Anonymous]

Retirement money stays out of the trust.

[Anonymous]

I would not leave it to the trust, I would just name beneficiaries directly.

[Anonymous]

I don't know the answer to your question yet wanted to bring something up that a lawyer mentioned to me.

Be sure you have a trust set up in a way that provides guardrails for your children. Having them inherit, say, a million at age 20 can be detrimental to their development and cause them not to fulfill their desires--or to have many desires in the first place.

You maybe know this but you can arrange for them to receive certain amounts at certain ages. This keeps them from blowing it all at once. When kids are kids, it's hard to know if they will end up with a drug problem or a mental health issue or something else that causes problems for them with the money.

Hope this is useful. Like I said, maybe you already know this since you have pro advice already.

Hope all works out well for you and your family!

[Anonymous]

Anonymous wrote:Any finance people on with knowledge on this?
for background: I'm in NYS (where apparently probate is "not a huge deal", according to estate planning attorney)

I have 2 different financial advisors telling me 2 different things:

1 says to make the trust i have set up for my kids as the Beneficiary of my IRA, because of the 10-year distribution rule for Inherited IRAs.
But the advisor at the bank I have the IRA with says to leave it directly to my children, to avoid probate.

TIA!

I posted above and didn't know the answer, but I want to say that I have the same question. My reading on the topic said that making the trust the beneficiary can cause problems, so my suggestion is to do some Googling and read what the reputable sources say.

[Anonymous]

Anonymous wrote:Any finance people on with knowledge on this?
for background: I'm in NYS (where apparently probate is "not a huge deal", according to estate planning attorney)

I have 2 different financial advisors telling me 2 different things:

1 says to make the trust i have set up for my kids as the Beneficiary of my IRA, because of the 10-year distribution rule for Inherited IRAs.
But the advisor at the bank I have the IRA with says to leave it directly to my children, to avoid probate.

TIA!

I live in New Jersey and probate is not a big deal here either. One of the few easy things in this state when it comes taxes. My mother died and had beneficiaries designated for everything. It was easy when it came to inheritance and estate. No lawyers necessary. Only downside I’ve been told is probate is public but not sure what the repercussions of that is so far.

[Anonymous]

Anonymous wrote:Any finance people on with knowledge on this?
for background: I'm in NYS (where apparently probate is "not a huge deal", according to estate planning attorney)

I have 2 different financial advisors telling me 2 different things:

1 says to make the trust i have set up for my kids as the Beneficiary of my IRA, because of the 10-year distribution rule for Inherited IRAs.
But the advisor at the bank I have the IRA with says to leave it directly to my children, to avoid probate.

TIA!

Lawyers have made this process so much more complex than it has to be in order to guarantee them future income streams setting up trusts in perpetuity. Yes in some cases a trust is necessary but careful. There are downsides to trusts as well.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I mean if you set the trust up as the beneficiary in your account it wouldn't go through probate either. I think the only drawback to leaving it to the children is if you have a conduit trust which was a much better set up before the Secure Act and the 10 year rule.

Thanks. And thanks for pointing out that neither goes through probate. Dont understand why he thought it would.

Why is probate bad especially in NY? It’s easy from my experience and much cheaper.

[Anonymous]

Anonymous wrote:Do you have over the $15MM/$30MM which triggers taxes (and what are NY estate tax thresholds and laws)?

It’s true that beneficiaries don’t deal with probate but the trust is to avoid taxes (and also doesn’t go through probate).

Exactly.
Most people don’t need trusts unless they are going to leave a lot of money to young children. The Big Beautiful Bill Act made the federal lifetime estate tax exclusion $16M starting in 2026, $32M if married. The state estate tax varies. The vast vast majority of people will fall under this. Just make sure you have beneficiaries designated for your accounts and possessions. Use a trust if your situation and state probate laws make it easier.

[Anonymous]

Anonymous wrote:Probate is a huge deal. Simplify it all before you pass.
How old are the children? Like adult children?
How much money?
If you have a lot, pay the advisor/lawyer to clear it all up. If you don't, why are you even wasting money and time on advisors and trusts. Make the kids beneficiaries. Or even better, start giving money away already now.
We received a traditional IRA and Roth IRA for a minor child sent straight to the other parent to manage. The rest of the money sits somewhere in estate account.
Depends of the state, the age of the children, the bank, the amount and who knows that else. Robinhood did not allow minors as beneficiaries.

Probate can be a PIA but it really depends on the state. In NJ it’s super easy. In Florida it’s a major PIA. Do the research on probate in your state before spending thousands on a lawyer to set up trusts.