IRA Expert Ed Slott Recommends Standalone IRA Trusts
I recently attended a two day seminar by nationally recognized IRA expert Ed Slott, CPA. If the protection of a trust for IRA beneficiaries is desired, Slott says that the best way is to have the IRA paid to a Standalone IRA Trust. He cautions that IRAs should not be mixed with non-IRA assets.
Slott also recommends that for married couples, spouses with large IRA balances should use the distributions to pay for life insurance to be held in trust for the other spouse, and then make the children (or a trust for their benefit) beneficiaries of the IRA. This leverages funds that are subject to income and possibly estate tax into completely tax-free monies, and provides optimum "stretching" of the IRA, allowing maximum growth. I think this strategy should be used for any couple with large IRA(s) and a total estate exceeding $2 million.
