Modified Accumulation Trusts For IRA or Other Qualified Plan Benefits at Death

James G. Blase (attorney and principal, St. Louis) and Mimi G. Sharamitaro (attorney, St. Louis) have published their article entitled Consider the MAT, Trusts & Estates, Feb. 2010, at 38. 

An excerpt from the article is below:

Recent private letter rulings issued by the Internal Revenue Service have created concern among estate-planning attorneys regarding the best way to draft trusts that are intended as potential receptacles of IRA or other qualified plan beneifts upon the death of the participant.  This concern stems from the fact that, unless the trust is properly drafted, it won’t be possible to stretch out the payment of the retirement benefits over the trust beneficiary’s lifetime.

. . . .

I suggest lawyers consider using what I call the “modified accumulation trust” or “MAT.” Hopefully this trust alternative will provide clients with maximum deferral of income taxes on qualified retirement plan and IRA benefits after the participant’s death–but without creating other significant estate-planning problems.