Q&A - Estate Planning for Retirement

Q: How do I know if I need this type of planning?

A: Generally, clients who want to ensure that their children obtain the tax advantages of the stretch-out of an IRA will benefit from this type of planning. Often, these clients want to protect their children from themselves, a potential spouse, in-laws, etc. Additionally, they may have a strong desire to keep assets in the family. The only way to know for sure is to have a discussion with a Connecticut estate planning lawyer. Together, we can determine whether or not an IRA Trust is right for you.

Note: With married couples, we can and should begin the process before the first spouse dies. We can still work together to help the widow or widower, but generally, more options are available beforehand.

Q: How can I truly make sure the adult children won't take the money in a lump sum distribution and derail the stretch-out?

A: We can't…but a properly drafted and documented IRA Trust can (as the Plan allows for stretch-out). Many clients have responsible children, but when it comes to inheritances, even responsible people will make irresponsible decisions. We can advise as to the tax benefits, but there are no guarantees that the beneficiary will take the advice.

Q: What if I want to protect my children from the taxes, but I also want to make sure they have the money if they really need it?

A: Retirement benefits planning with a qualified see-through trust does not have to restrict adult children to distributions only in the amount of the Minimum Required Distribution. The Trustee can be given discretionary power to distribute more if necessary, or in accordance with the client's wishes made clear prior to the need for distribution.

Q: What if my IRA doesn't permit certain options for distribution?

A: Generally speaking, the Plan governs unless it erroneously allows for distributions at a slower rate than the Required Minimum Distribution rules. We may be able to identify a different Plan without creating a taxable event, but this decision should only be made under the guidance of your legal, tax and financial advisor(s).

Q: I think an IRA Trust is right for me. How do I get started?

A: Pick up the phone and contact a Fairfield County estate planning lawyer from our firm for a consultation. You can contact us at (203) 651-5521. We can help you take whatever next steps are appropriate and ensure that the tools you wish to utilize are implemented as effectively as possible.