Ohio  |  Wills and Trusts

Legal Question

Asked on: 4/22/02, 12:29 pm

Managing spousal IRA's in a family living trust

My wife and I have a living trust and have assigned ownership of all of our assets to the living trust except for our IRA's. The IRA's represent a substantial part of our combined estates. Each of us have named the other as prime beneficiary under our respective IRA's and each of us have named the Living Trust as a contingent beneficiary. We have provided for AB trusts in order to separate property ownership to minimize Federal and state estate and inheritance tax. We have three adult children, two married and two grandchildren.

We want to be certain that none of our assets will be probated. How should we manage our IRA's? For example,

assuming I die first, what should my wife do with the IRA she receives from me? Can she disclaim ownership of the IRA

and place it in the B Trust created upon my death in order to keep it out of her estate for estate tax planning purposes. At the same time, how does she satisfy the Federal income tax rules requiring her to take annual IRA distributions from her deceased husband's IRA? I would want her to use the funds for herself upon her discretion but at the same time to leave as much in my B Trust in order to minimize estate taxes.

Thank you

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