QUESTION
Effect of RMD on a Marital Deduction Trust
Asked on Apr 27th, 2017 on Trusts and Estates - Pennsylvania
More details to this question:
My wife is the beneficual of the MDT established under my will. .The bulk of my estate is in my IRA. When I die, is my trustee required to take the full distribution from the IRA and pay taxes on the full amount? Or is my wife's age used to take an annual RMD? When my wife dies, I assume that the IRA is totally taxed before distribution to my five beneficiaries under the Residuary Trust. Correct?
1 ANSWER
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Planning with IRAs can be complicated for estate planning. There are many reasons why you might want to have a marital deduction trust. Usually its to avoid federal estate tax. You'd have to have a huge IRA to have a federal estate tax issue. If your IRA is not over $5 million (and yours would be the first I've ever seen if it is), you probably don't need a hard-set marital deduction trust in your estate plan for tax purposes. Typically when faced with your situation, I would create a disclaimer trust in your will so that your wife can take stock of your assets and decide what she wants to retain and what makes sense to put into a disclaimer trust. That way, you avoid any unnecessary tax issues involving the IRA. I'd need to know a lot more about your assets in order to give you more specific advice.
Answered on May 01st, 2017 at 6:40 AM