There is probably no such thing as a simple question regarding minimum distributions.
This reader illustrates how there is probably no such thing as a simple question regarding minimum distributions. Rarely do I answer "yes" or "no." More often the answer is, "It depends!"
Question: The IRA owner or participant ("Husband") died in 2007. His IRA was payable to a trust. The trust was a qualifying "see-through trust" under the IRS' minimum distribution regulations. Husband's surviving spouse ("Spouse") was the sole beneficiary of the trust. Required minimum distributions (RMDs) have been computed based on Spouse's life expectancy as the oldest trust beneficiary. Spouse died in 2013. Upon her death, the trust is to terminate and be distributed outright to the couple's four children. Do we continue to calculate RMDs based on the Spouse's life expectancy, or do we now switch over to the oldest child's life expectancy?
Answer: First we have a terminology issue. When you say Spouse was the "sole beneficiary" of the trust, do you mean the trust was a conduit trust? Or do you merely mean that she was the sole life beneficiary? The trust was a "conduit trust" if the trustee was required to transmit to Spouse, upon receipt, all distributions the trustee received from the IRA during Spouse's lifetime (minus applicable expenses).
If the trustee had the power to "accumulate" (not immediately distribute to Spouse) any distributions the trust received from the IRA during her lifetime, then the trust was an "accumulation trust," not a "conduit trust." Either type can qualify as a "see-through trust" for minimum distribution purposes, but the answer to your question could be different depending on which type it was.
Now to your question. The basic answer is, you NEVER "flip" over to someone else's life expectancy just because a trust beneficiary dies. The death of a beneficiary (in your case, Spouse) after the participant has died has basically NO EFFECT on the Applicable Distribution Period (ADP).
The "Applicable Distribution Period" (ADP) for an IRA is "carved in stone" once the participant dies. We determine who the designated beneficiary(ies) is (or are) at the moment of the participant's death, and that's it. Subsequent events (such as the death of a beneficiary or the termination of a trust) will have NO effect on the ADP. Regardless of how many deaths or trust terminations there may subsequently be, the ADP "is what it is" on the participant's death.
So basically you don't have to worry about the ADP somehow changing on Spouse's death or flipping over to the children's life expectancy--it ain't gonna happen!
Of course there are ALWAYS exceptions in the minimum distribution rules. Here are the four exceptions to the "carved in stone" rule. In these situations the stone may crumble or expand or otherwise get "uncarved":