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GiftLaw Pro Home   >  Chapter 3 - Deferred Gifts  >  3.11 Unitrust Applications  >  3.11.5 Stretch Unitrust with IRA  >  Basic Quiz

Basic Quiz - 3.11.5 Stretch Unitrust with IRA

1. A stretch IRA allows the designated non-spouse to receive distributions over his or her life expectancy.
           
2. Children do not pay income tax when they receive IRAs from their parents.
           
3. Once a child or grandchild elects to stretch the IRA payments over ten years, it is an irrevocable election.
           
4. An IRA that passes to a charitable remainder unitrust to benefit children is not subject to estate taxes because a charity is the ultimate beneficiary of the IRA.
           
5. Through proper planning and investment, it is possible for a trustee to pay out tax-free income from the testamentary unitrust that was funded with an IRA.
           
6. In short, the four-tier accounting system requires income beneficiaries to pay tax at the highest rate on distributions received from their testamentary charitable remainder unitrust.
           
7. After an IRA is transferred into a testamentary unitrust, the trustee will have to report and pay income tax on the IRA because it is an IRD asset (income in respect of a decedent).
           
8. The most effective way to leave an IRA to charity or a charitable remainder unitrust is to make sure that a provision in the will directs that the IRA pass to the appropriate charity.
           
9. Naming charity as a beneficiary of an IRA causes the minimum required distributions to be increased during the donor's lifetime because a charity is not a person and does not have a life expectancy.
           
10. It is not permissible to leave a portion or percentage of an IRA to a charitable remainder unitrust. It must be done either in whole or not at all because of the complex IRA distribution rules.