Do Conduit Trusts only to distributions that have the Trust as an IRA Beneficiary? In other words, I am assume that a Conduit Trust only has to distribute the IRA money when it is received to the Trust Beneficiaries and doesn’t have to distribute other NON IRA Trust income immediately. Is that correct?
My father has a Trust and I am trying to help him. Unfortunately his lawyer’s tax knowledge seems to be lacking. I am familiar with the new Secure Act where money to some beneficiaries has to be distributed within 10 years. My father wants it to be a Conduit (vs. an Accumulation) Trust where the money received from the IRA to his Trust has to be distributed right away. Currently there is nothing in his Trust to indicate whether it is a Conduit Trust vs. an Accumulation Trust. If my father had his lawyer add a clause like this would it suffice and make it a Conduit Trust?:
Trust as an IRA Beneficiary: This is a Conduit Trust and requires that all amounts received from the Grantor’s IRA be distributed to the Trust beneficiaries upon receipt by the Trustee in the following manner:
(i) Distribute one half (1/2) of the amount received from the IRA to John Doe.
(ii) Distribute one half (1/2) of the amount received from the IRA to Jane Doe.
