Confirming information from a conversation I had with an estate attorney today. This concerns IRA's that my brother and I (separately of course) want to leave to family members who might be either too young or too financially unsophisticated to handle
the money on their own. So the goal here is to have some third-party control over the money while not giving up the tax benefits of the IRA over the next 10 years.

If an IRA is left to a testimentary trust, income earned on the IRA while the IRA is in the trust is not considered taxable income, as it would not be (currently) taxable income if it weren't in the trust.

At the end of ten years, the IRA's would have to be emptied. Money in a Roth IRA would not be taxable, money in a traditional IRA, if paid to the beneficiaries, would be taxed at the beneficiary's rate. Also, money paid out during the ten years that
the inherited IRA can exist would be the same; from a Roth not taxable, from a traditional, taxable at the beneficiary's rate.

For the traditional IRA, you'd presumably want the money emptied and placed in a new trust because if it stayed in the old one, the proceeds that stay in the trust would be taxed at the trust rate. For the Roth, it wouldn't matter on the "conversion"
date but after that date, all income would be taxable and taxed at the trust rate if not distributed but taxed at the beneficiary's rate if distributed.

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