While rarely occuring, it is possible to put funds from an IRA into a trust for a future beneficiary. This may be worthwhile in the event that an Ohio parent wants to bypass the right of a second spouse to directly inherit the funds. Typically, a surviving spouse may either rollover the IRA or take the funds as part of an inherited IRA account. However, by putting the funds in a trust, the money goes to whoever is designated as the beneficiary.
In the event of a divorce, an individual doesn’t necessarily need to worry about losing a portion of his or her account to the other spouse. Another good reason to put an IRA in a trust is to protect a child who may have poor money management skills. Instead of being able to decide when to take distributions, money will be distributed according to the language of the trust.
If a parent owning an IRA with a child as a beneficiary were to pass away while the child was under the age of majority, the child couldn’t have access to the funds. However, putting the money into a trust makes it the owner, and the trust can dictate when and how money is used.
Creating an IRA trust may be an important part of estate planning. While such a trust is complex and needs to be created properly, an attorney may be able to help those who are interested in one. This may help ensure that a child receives his or her inheritance in accordance with the wishes of the account holder.