Special Trivia Question for 4/7/2026 (Taxation of Inheritances)

This blog post simplified the rules for taxing inherited assets under the SECURE Act. It is written primarily with adult children in mind, who are considered “non-eligible designated beneficiaries” under the SECURE Act.

There is a separate category of “eligible designated beneficiary,” and these individuals receive more favorable treatment. There are five types of “eligible designated beneficiary.” Which of these is NOT an example of one of these?

A. Decedent’s surviving spouse
B. Decedent’s 22-year-old son, who is a full-time student
C. A beneficiary who is disabled
D. A beneficiary who is chronically ill
E. Decedent’s hairstylist, who was born five years after the decedent.

Since I think my audience consists of excellent test takers, I’m guessing most of you thought E. was too obvious. If so, your instincts were correct. If the beneficiary is not more than ten years younger than the decedent, they’re an eligible designated beneficiary. It doesn’t matter if or how they’re related.

B. is incorrect, but it’s close. If a minor child is under age 21 (age of majority), they are eligible designated beneficiaries. After age 21, they are subject to the ten-year rule.

This creates a weird situation where a child under age 24, who is a full-time student, could be claimed as a dependent on the decedent’s tax return, yet still get the less favorable tax treatment of their inheritance. It doesn’t make a whole lot of sense, but that’s how the rules are written.