- Jurisdiction
- Washington
Hi,
I'm just trying to figure this out.
My father had a trust, which listed the primary beneficiary (my stepmother), and all remainder beneficiaries (the children and grandchildren of my father). "All" property named in the trust went into a non-revocable testamentary trust, including an IRA (in which his trust was the beneficiary of the IRA) upon his death. Our stepmother was the beneficiary, but she was only to have income from this testamentary trust paid to her, and some other minor real property ownership expenses (taxes, insurance on the house she lived in) paid by the trust. The initial trust also stated that the trustee should protect the principal so that it can be distributed to the remainder beneficiaries (the children of the deceased) upon her passing. The testamentary trust was setup for our stepmother, and the testamentary trust document was provided to the IRA custodian, this was in 4-5 months of my father's passing. She passed and now we have access to the Testamentary Trust investment accounts, IRA and regular.
My question is regarding the Inherited IRA treatment by the trustee. The IRA was setup as an Inherited IRA. The inherited IRA paid out very large RMDs (1/5 of IRA value annually) to our stepmom as IRA RMD beneficiary distributions. Over the course of 4 years, our stepmother received 4/5ths of the principal on the initial amount put into the Inherited IRA. This was done by the trustee, I believe, using the 5 year rule. So the IRA is sitting at 1/5th it's initial value. Our stepmother already received 1/2 community interest in the IRA during the probate process, it doesn't sound fair that she get's the other 4/5s of the remaining portion of my father's IRA that was destined for the remainder beneficiaries (us).
Common sense, I believe the RMD should have been treated differently with an income portion going to my stepmother, and a principal portion going to the trust. Or maybe all going to the trust, and the trust reimbursing income later. Thoughts, I really didn't want a big legal thing out of this. I can't see how this can possibly right, as per the trust guidelines specifically state that principle is for the remainder beneficiaries. I believe the trustee was trying to act fairly, and handle the RMD, and I don't think this was purposeful in the intent to move wealth. It's a complex situation after all. But, did the trustee handle this correctly, and if not, what recourse to I have?
Any advice appreciated.
I'm just trying to figure this out.
My father had a trust, which listed the primary beneficiary (my stepmother), and all remainder beneficiaries (the children and grandchildren of my father). "All" property named in the trust went into a non-revocable testamentary trust, including an IRA (in which his trust was the beneficiary of the IRA) upon his death. Our stepmother was the beneficiary, but she was only to have income from this testamentary trust paid to her, and some other minor real property ownership expenses (taxes, insurance on the house she lived in) paid by the trust. The initial trust also stated that the trustee should protect the principal so that it can be distributed to the remainder beneficiaries (the children of the deceased) upon her passing. The testamentary trust was setup for our stepmother, and the testamentary trust document was provided to the IRA custodian, this was in 4-5 months of my father's passing. She passed and now we have access to the Testamentary Trust investment accounts, IRA and regular.
My question is regarding the Inherited IRA treatment by the trustee. The IRA was setup as an Inherited IRA. The inherited IRA paid out very large RMDs (1/5 of IRA value annually) to our stepmom as IRA RMD beneficiary distributions. Over the course of 4 years, our stepmother received 4/5ths of the principal on the initial amount put into the Inherited IRA. This was done by the trustee, I believe, using the 5 year rule. So the IRA is sitting at 1/5th it's initial value. Our stepmother already received 1/2 community interest in the IRA during the probate process, it doesn't sound fair that she get's the other 4/5s of the remaining portion of my father's IRA that was destined for the remainder beneficiaries (us).
Common sense, I believe the RMD should have been treated differently with an income portion going to my stepmother, and a principal portion going to the trust. Or maybe all going to the trust, and the trust reimbursing income later. Thoughts, I really didn't want a big legal thing out of this. I can't see how this can possibly right, as per the trust guidelines specifically state that principle is for the remainder beneficiaries. I believe the trustee was trying to act fairly, and handle the RMD, and I don't think this was purposeful in the intent to move wealth. It's a complex situation after all. But, did the trustee handle this correctly, and if not, what recourse to I have?
Any advice appreciated.
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