The “IRA to Further Trust Concept” and the Beneficiary Deemed Owner Trust – Don’t Run for the Hills

Authored by: Stephen R. Elville, J.D., LL.M. – Managing Principal and Lead Attorney – Elville and Associates, P.C.

Much is said and written these days about the evils of IRAs being beneficiary-designated to trusts. Practically speaking, most of this is gibberish and nonsense. Yes, there is the black letter tax law side of things that on its surface makes for good journalistic fodder for magazines and newspaper articles. But the truth is that most Americans are saving the majority of their assets in retirement plans, and along these lines they must eventually know what to do with those assets at their deaths, including the beneficiary deemed owner trust.

When it comes time for estate planning, most individuals and couples will be very interested in knowing what their choices are, including the concept of asset protection for retirement plan funds for children, grandchildren, nieces, and nephews, and others. This is especially so since inherited IRAs are generally not protected from the claims of beneficiary creditors. The naysayers will tout the compressed and daunting 37% tax rate on trust income (and who can blame them?), and for beneficiaries that are non-exempt under the 2020 Secure Act, the ominous 10-year rule for complete depletion and taxation of the inherited IRA funds. But it will behoove clients to look under the imaginary hood prior to running as fast as they can away from the “IRA to further trust concept, including the beneficiary deemed owner trust.

By taking the time to understand the various options available, depending on your goals and the factual situation surrounding the beneficiary or beneficiaries, you will learn that in some instances, extending at least some protection and control over the disposition of inherited IRA assets may help to accomplish your purposes and intentions, including available techniques such as a beneficiary deemed owner trust or BDOT, which may be used to extend the length of time assets may be protected in further trust – and in the process you may discover that much of the hype surrounding IRAs being beneficiary designated to trusts fails to mention the key element: fiduciary management by the trustee of the trust, its investments and tax reporting, and the management of trust income, and how taxes are dealt with to minimize or even nullify such over-the-top concerns.

In an education-based, client-focused process of estate planning, you can become informed, educated about such tools as the beneficiary deemed owner trust and get beyond the shiny quasi-fiction that is oftentimes spewed out across the U.S. Be sure to get the facts about estate planning for retirement plan assets through sound legal counseling and do yourself and your family a real solid. You won’t have to run for the hills (actually or metaphorically) unless you just want to get away from it all.

Stephen R. Elville, J.D., LL.M, is the Managing Principal and CEO of Elville and Associates, P.C., a leading Estate Planning, Elder Law, Special Needs Planning, and Business Planning law firm, serving Maryland and the District of Columbia. He can be reached at 443-393-7696 x108, or via email at

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