Estate PlanninG

See Through Trusts

The stretch payout is available to the designated beneficiary, defined in the IRC Code, as "any individual designated as a beneficiary…".

If the owner of an IRA or qualified plan dies before their required beginning date [April 1 st of the year after they are 70-1/2], and there is no designated beneficiary, then the whole balance in the account has to be distributed by December 31 st of the fifth year after the death of the owner.

But if the owner dies after their required beginning date, the RMD must start by December 31 st of the year after death and is based on the owner's remaining life expectancy.

Since the trust is an entity and not an individual, it cannot be designated as a beneficiary. But, if the trust qualifies as a "see through", then the individual trusts beneficiaries can qualify as designated beneficiaries.

In order for this to work all trust beneficiaries should be individuals, then the life expectancy the trust uses to stretch the qualified plan or IRA is based on the age of the oldest beneficiary.

To be a See Through Trust, the trust must have the following requirements:

  • Be irrevocable, or become irrevocable when the owner of the retirement plan dies;
  • The beneficiaries must be identified in the trust;
  • The trust has to be valid under state law and
  • A copy of the trust should be given to the plan administrator by October 31 st of the following year after the death of the owner.

California Estate Planning Attorney San Ramon

At Santaella Legal Group, APC, our legal team experienced in handling estate planning, probate and business law matters. We can carefully evaluate your situation and determine whether probate or administration is necessary. We suggest you take advantage of a consultation where you can get answers to your questions. Please don't hesitate to contact a San Ramon estate planning, probate or business attorney at our firm by calling (888) 698-3951, or you can fill out our online case evaluation form.