DOES THE TRUSTEED IRA REALLY SATISFY A PRESSING NEED?

I had seen stuff about trusteed IRAs before, but since the Tax Prof Blog posted something about it recently, I thought a short post of my own addressing the subject would be worthwhile.  The idea is that you leave your IRA to a beneficiary without the beneficiary gaining direct control of the account.  To put it another way, It’s a way to put the account under the control of a trustee without setting up your own trust and directing the account to that trust (by naming that trust as the beneficiary of the account).  The trust in turn names as its beneficiary the person(s) who you want to have the benefit of the account (but without giving them control of it).

Naming a trust as the beneficiary of an IRA can get you the same outcome as a trusteed IRA.  The rules that govern the tax treatment of an IRA that has a trust as the beneficiary are very complex, however.  I can see some advantages to using a vehicle that gets the desired outcome without having to contend with those tax rules.

The larger question is whether or not you need to have a trustee hold the account at all.  If the people who you want to have the benefit of the account are children or are disabled, then you need to have a trustee hold the account for their benefit.  Otherwise, it's probably not necessary.