Should my spouse or children be the beneficiary of my self directed IRA or should I list my living trust?

Spouse of children beneficiaries:

Pro: If you name your spouse as the beneficiary, he or she can treat it exactly like their own IRA, in what’s called a spousal rollover.

Possible Con: A spousal rollover with no contingency beneficiary allows your spouse to determine who should benefit from the IRA down the road.

Possible Con: If you name a minor, such as a child or a grandchild, as the beneficiary of your IRA, you will also need to name a guardian who will manage the IRA funds for the children until they reach adulthood (18 or 21 years of age, according to the state).

Trust Beneficiary:

Pro: A trust can provide the legal structure needed to give money to someone you don’t trust with managing your assets. Frequently, people with minor children choose to have the trust be the beneficiary to remove the decision making burdens from the kids.

Possible Con: Transferring IRA assets into a trust may cost you more in the long run, particularly because this transference of assets triggers tax removal. A trust is not a named beneficiary, and therefore will be subject to RMD calculations based on your age factor. This may force a younger beneficiary named within the trust to distribute more from the account each year than if they were specifically named as the beneficiary.