In the case of IRAs and qualified plan death benefits, designating the surviving spouse as the death beneficiary is usually preferable for income tax planning purposes and may be the only alternative that avoids unnecessary complexity, but it may mean that the full credit shelter amount is not available to fund the credit shelter trust, unless other assets are sufficient. If other assets are not available, we often recommend that a credit-shelter formula having a special type of trust be designated as an IRA or plan beneficiary.

Large bank accounts, stock brokerage accounts and certificates of deposit should seldom, if ever, be held in joint tenancy with right of survivorship or otherwise be payable to a third party at death.

Instructions for Clients Who Have Executed Life Insurance Trusts (PDF)

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