Updated July 28, 2026. Quick answer: It buys control and creditor protection and costs tax efficiency and complexity. The 10-year rule made the tax cost smaller than it was — the stretch that a trust used to jeopardise mostly no longer exists for anyone to lose.
The calculus changed in 2019
Under the stretch rules, naming a trust risked destroying decades of deferral, so advisers were rightly cautious. With most beneficiaries now on a 10-year clock regardless, there is far less deferral left to protect — which makes the control a trust provides relatively cheaper than it was.
Reasons that still justify it
- A beneficiary who should not receive a large sum outright — young, inexperienced, or vulnerable.
- Creditor or divorce protection.
- A special-needs beneficiary whose means-tested benefits a direct inheritance would jeopardise.
- Children from a prior marriage, where you want the remainder to reach them.
The drafting decides everything. A trust that fails the see-through requirements can be treated as a non-designated beneficiary — often a five-year emptying, at compressed trust rates. This is not a form to download; the difference between good and bad drafting here is measured in years of tax.
If you decide against it
Naming individuals directly is simpler, cheaper and usually more tax-efficient. Most people should do that. The trust is for the specific problems above, not for tidiness.
For the other side of this — a trust has already been named and you are the one dealing with it — see what happens when a trust is the beneficiary.
Sources
SECURE Act (2019); SECURE 2.0 (2022); final RMD regulations published 19 July 2024; IRC §401(a)(9); IRC §1014 (basis of property acquired from a decedent); IRC §664 (charitable remainder trusts). Cross-checked July 2026 against professional analyses from Kitces, Grant Thornton, Ascensus, Charles Schwab and Kiplinger. Indexed figures and state-specific rules are flagged rather than asserted.
This states what the cited authority says. It is not tax or legal advice, and beneficiary planning turns on family facts and state law that no page can see.