PLR 201021038PLR 201021038

IRS ignores trust amendment designed to create “designated beneficiary”

PLR 201021038 (May 28, 2010) shows the importance of careful drafting for a trust designated as the beneficiary of a retirement plan. In this ruling, a husband named the bypass trust created upon his wife's death pursuant to their revocable trust as the beneficiary of his individual retirement account. Upon the husband's death, after the satisfaction of certain bequests, all of the trusts created pursuant to the trust agreement (including the bypass trust) were consolidated and divided equally between two protective trusts, one for the benefit of each of the husband's daughters. The terms of the protective trusts authorized the trustee to distribute income and princip...