After a lifetime of hard work, many people have a large portion of their wealth tied up in their IRA’s. But, they might not think it wise to leave such a large sum of money to certain heirs or beneficiaries. Most money managers tell their clients that they can only name individuals on their IRA beneficiary forms. Is this true?
No. You can leave your IRA assets to a beneficiary in trust. But, here’s the catch…it must be a Retirement Benefits Trust which contains specific language that satisfies the IRS because these assets have not yet been taxed.
If properly drafted, a Retirement Benefits Trust can preserve your assets for your beneficiary and the tax deferral treatment will not be lost.
I recommend the use of a Retirement Benefits Trust in a variety of circumstances such as:
• You have remarried and want your new spouse to have the use of your IRA income, but not control over the principal
• You have minor children or your children are not responsible with money
• You have a beneficiary who is in the middle of a lawsuit or in the middle of a divorce and subject to alimony
• You have a beneficiary with Special Needs
There might be other circumstances where it is not appropriate to leave your Retirement Benefits outright to a beneficiary. The use of a Retirement Benefits Trust can preserve these assets and the tax benefits for your loved ones.
Questions? The Law Office of Debra Simms is here to help. Call us today 386.256.4882
This blog post is not case-specific and is provided only for educational purposes and is not intended to provide specific legal advice. Blog topics may or may not be updated and entries may be out-of-date at the time you view them.