Can an IRA of the Deceased Transfer Into Trust?

by Melanie J. Martin

IRA account holders have a number of options for transferring their funds after death. Transferring the funds into a trust is just one option. Account holders must name a beneficiary when they open their accounts, but they can modify who they want to transfer the funds to, and how, as the NOLO legal advice website says.


Common beneficiaries to an IRA account include a spouse, children or other family members. The account holder can nominate a trust as well, whether it belongs to a loved one or an organization. For example, she could nominate a living trust shared by a spouse or scheduled to be distributed among children after her death. The IRA account holder should name a contingent beneficiary as well as a primary beneficiary, in case the primary beneficiary dies before her. The account holder could also name a charity, or a mixture of individuals, charities and/or trusts. The estate becomes the beneficiary if the account holder does not name one.


An account holder might wish to transfer his IRA into trust to ensure a family member is provided for after his death. The trust fund may stipulate when payments will be made to the beneficiaries, so they won't receive all the funds at once. This ensures they're provided for over a longer period of time. A trust also manages the funds it holds, aiming to keep them growing through investments, which is another reason why transferring IRA funds into a trust can help to provide for a beneficiary.

Importance of Planning

Planning what will happen to the IRA in the event of the death will ensure beneficiaries receive the maximum possible payments. If the IRA is first transferred into an estate fund because no beneficiary was named, higher taxes usually result. Furthermore, weighing how much a beneficiary could receive per year if he deferred the payments, in comparison to how much he'd receive if he began them immediately, will help him determine which option to choose. Reading the fine print and determining these options in advance may aid in making more informed decisions. Consulting with a trusted financial adviser will also help in determining how to handle the funds.

Other Options

A surviving spouse who is the designated beneficiary of the IRA can also continue receiving payments from the IRA account, or roll the account over into her own IRA. She could elect to begin receiving payments at the age when her late spouse was scheduled to begin receiving payments, or she could begin receiving them sooner. Alternatively, she could name a new beneficiary to the account.

About the Author

Melanie J. Martin specializes in environmental issues and sustainable living. Her work has appeared in venues such as the Environmental News Network, "Ocean" magazine and "GREEN Retailer." Martin holds a Master of Arts in English.

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