People with a revocable living trust often forget to use the trust when they fill out their designated beneficiary for their IRA or 401K or other qualified retirement account. The participant's spouse is normally the first beneficiary. The second beneficiary should be the Trustee of the participant's revocable living trust.
Even if the trust is intended to pay out to your children, listing the trust avoids having to have a conservatorship because a minor is a beneficiary. A minor in Arizona can only receive $10,000 in a year so if an IRA or 401K is going to pay out more than $10,000 to the minor, a conservatorship has to be set up with the court and last until the minor is 18.
If you list the trust, then the trustee can hold the retirement account benefits without court involvement. If you are leaving your retirement account to adult children, then list the adult children as the second beneficiary after the trust. Then, if an adult child predeceases you, his share can go to your minor grandchildren without the court being involved. If the adult children are all alive, the Trustee can disclaim or distribute the qualified retirement account to the adult children and it can even be stretched over their life time.
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