Case #6 · Ann D.
IRA to a Multi-Life Unitrust
Treating three children equally when one struggles with money.
The situation
Ann of Lake Worth, Florida, has three children and a $2.1 million estate: a $1.2 million IRA and $900,000 of other property.
One child has a long history of poor money management and would do better with lifetime income than a lump sum.
The goals
- Give her children principal and then lifetime income
- Treat all three children equally
The strategy: A charitable remainder unitrust named as IRA beneficiary
- The trust planner creates an unfunded unitrust for the lives of the three children.
- Ann names the unitrust trustee as beneficiary of her $1.2 million IRA.
- At her death the IRA goes to the unitrust, and each child receives one-third of its income for life.
- The children receive the rest of the estate outright, over $250,000 each.
The results
| Lifetime income to the children | About $2.5 million in total, about $800,000 each |
|---|---|
| Principal at Ann's death | Over $250,000 per child |
| To charity | About $2.4 million after all three children |
Figures are illustrative and based on the tax rules in effect when the case was prepared. Results vary.
Could a strategy like this work for you?
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