Stand-Alone Retirement Trusts
Suppose you have an Individual Retirement Account (IRA), which is not fully depleted at the time of your death. Where do you want that money to go, and how do you want it to be distributed? While you can name a specific beneficiary (or beneficiaries) of your remaining IRA funds, you should consider whether or not you want the beneficiary to be able to receive the IRA proceeds in a lump sum payment after your death. Negatives of the lump sum approach include unwise spending decisions and significant tax liability.
A Stand-Alone Retirement Trust Helps Plan For The Unexpected
If you do not feel comfortable with the beneficiary receiving the money all at once—perhaps he or she is still very young or has a history of being irresponsible with money—you might prefer that he or she not have the option to receive the funds in a lump sum. In such situations, a Stand-Alone Retirement Trust might be a useful tool to consider. A Stand-Alone Retirement Trust is a Trust that is created for the sole purpose of serving as the beneficiary of the remainder of your IRA funds (and other qualified funds, e.g., 401(k)). Thus, the Trust will be funded after you pass with whatever is left of your retirement assets. Then, the trustee of the Stand-Alone Retirement Trust will oversee the distribution of the funds to your heir(s) in a manner you see fit.
Some Other Useful Benefits Of A Stand-Alone Retirement Trust
- Asset protection in the event of a divorce
- Asset protection from creditors
- Generation-Skipping tax benefits
- Protects the beneficiary with respect to government needs-based benefits
- Alleviates the need for a court-appointed guardian for minor beneficiaries
- Asset protection in the event the beneficiary becomes incapacitated
- Allows for successor beneficiaries
- And more.
At Politakis Law, we provide our clients with comprehensive estate planning support that’s personalized to suit their specific needs. We know that preparing for the future can be difficult and overwhelming, but when you turn to us, you can rest assured that we will offer professional, knowledgeable guidance to help you reach your goals. Ready to get started? Schedule your virtual or in-person consultation with Politakis Law today for estate planning & elder law assistance in Schererville.