Hi,
This question is being triggered because Fidelity does not seem to allow a testamentary trust to be a beneficiary of an IRA or brokerage account.
If my wife and I both die, and the will sets up a testamentary trust for our minor children; and the children themselves (not the trust) are contingent beneficiaries of an IRA, will the IRA be automatically folded into the trust?
Additionally, would the answer be the same for life insurance? 401ks?
529 plans?Thanks
You can accomplish your goals by specifying your estate as the contingent beneficiary of you various accounts and insurances. This will pass all the accounts through your estate and into the trust. Of course, the accounts will pass through probate.
Why don't you just set up an actual irrevocable trust, with a proper TIN, and use that?
I'm a bit out of my league regarding the 'testamentary trust' but I do have experience with revocable and irrevocable trusts, which can be the beneficiary of the above.
You need to be very careful on the wording of the trusts to make sure the stretch provisions of inherited IRAs and now 401(k)s are not lost upon receipt by the trust. It's too easy to mess these up. Seek proper council (i.e. a trust attorney) if you go that way. JOE
I work at Merrill Lynch and 'happened onto your email' I will ask our internal Trust Attorney for you and get back.
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