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Q: Dear Angus;  I don’t know how to say this any other way, but I have three children and one of them can not handle money.  Is there a way I can prevent him from spending my IRA right away after I am gone?     Kaye - Oregon

A: Well Kaye you are in luck.  There are actually two ways you can protect your son from spending away his future income as soon as he inherits your IRA. One way is to have a special IRA Trust created - that you name as your beneficiary - as it will not be taxed at your death.  This trust can hold your son’s inherited IRA while the trustee manages the annual required minimum distributions from the IRA.  The trustee can be responsible for the amount you want distributed out to your son from the required annual distributions, keeping any surplus reinvested in the trust.

Another way is to place your IRA assets with an IRA custodian that has a “beneficiary withdrawal restriction.”  Using this method, after your death the custodian can be directed to distribute only the required annual minimum distribution amount each year over the lifetime of the beneficiary, your son.  You can also direct the custodian to distribute only the required annual distribution for the first so many years - and then give the beneficiary full rights after that time.  This method of limiting your beneficiary is much simpler and less costly.

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