IRA Trust - protect your retirement plan benefits for your children

Many of you already have a Living Trust. Some of you may not because you were told that you didn't need one because the bulk of your assets were in an IRA or 401(k), or some other qualified plan.

The problem with this is that those assets are not protected after you pass away and they are distributed to your children. One way to protect them properly is to use a Retirement Plans Trust or IRA Trust.

The response I usually get to this statement is that "I was told that if I name a Trust as a beneficiary of my IRA that my kids will lose the tax-free growth benefits."

My response to this concern is that you don't necessarily have to settle for a Trust that results in a loss of the tax-free growth benefits.

A properly drafted IRA Trust can protect your children from divorce, creditors, lawsuits, and even themselves, while ensuring that they get the benefit of stretching the pre-tax growth of those assets.

This is a big deal because it didn't always used to be this way. It used to be that in order to realize the maximum benefits of continued tax-deferred growth, you would have to leave the assets outright (i.e. not in trust) to someone.

It used to be that if you wanted protection for your kids then you would have to give up the tax benefits after you passed. So rather than give up these benefits, most folks would just gamble and assume that their kids would listen to their advisor and take distributions only when they needed them, instead of taking one lump sum distribution and subjecting that money to creditors, potential divorce, lawsuits etc. Many of these folks were wrong, and inheritances have been lost or wasted as a result. It doesn't matter how smart or responsible your children are...nobody can predict the future.

The IRA tust avoids these kinds of problems. It can provide your children with access in the event they need it as well as continuous yearly payments in accordance with the Tax laws, while protecting your children from themselves and threats such as divorce, frivolous lawsuits, and predatorial creditors.

Before utilizing this kind of trust or any other estate planning tool or strategy, you should discuss the pros, cons, and alternatives with your estate planning attorney.

If you would like to learn more about a Retirement Plan Trust or IRA Trust, feel free to visit our website for our contact information by clicking here.