Do you have IRAs or other retirement accounts that you plan to leave to your loved ones? If so, proceed with caution. Most people don’t know the law has changed: inherited retirement accounts no longer have asset protection, meaning they can be seized by strangers.
How Can Inherited IRAs Be Protected? Enter the Standalone Retirement Trust
Fortunately, retirement account protection still exists but only if you take action. Many people like you are using Standalone Retirement Trusts (SRT) to protect retirement assets. The SRT is a special type of revocable trust just for retirement accounts.
A properly drafted SRT:
● Protects the inherited retirement accounts from creditors as well as predators and lawsuits
● Ensures that inherited retirement accounts remain in your bloodline and out of the hands of a daughter-in-law or son-in-law or former daughter-in-law or son-in-law
● Allows for experienced investment management and oversight of the assets by a professional trustee
● Prevents the beneficiary from gambling away the inherited retirement account or blowing it all on exotic vacations, expensive jewelry, designer shoes, and fast cars
● Enables proper planning for a special needs beneficiary
● Permits you to name minor beneficiaries such as grandchildren without the need for a court-supervised guardianship
● Facilitates generation-skipping transfer tax planning to ensure that estate taxes are minimized or even eliminated at each generation of your family
The Bottom Line on Protecting Inherited IRAs
Unfortunately, the Supreme Court decision has made outright beneficiary designations for IRAs and other retirement accounts risky business. However, we are here to help you decide whether an SRT is a good fit for you and to answer your questions about protecting your retirement accounts.
If you want to ensure that your family is cared for, please click here to schedule your complimentary Estate Planning Strategy Call with San Francisco’s premier estate planning attorney, Matthew J. Tuller.