IRAs and
Living Trusts
Protection of your Individual Retirement Accounts takes more
planning than the beneficiary form offered by your bank or brokerage
firm.
Are
your IRA accounts included in your Living Trust?
Unfortunately most IRA account holders are unaware that their
retirement accounts are not included within their Living
Trust.
By design, Living Trusts are established
to distribute real estate property, brokerage accounts, bank accounts, and other
personal property...
and DO NOT address the
significant portion of most individual's net
worth...
... their retirement accounts such as 401(k),
403(b), 457, Traditional IRA, or Roth IRA
accounts.
Estate planning that includes your retirement accounts is more
important than ever in light of the June 12th, 2014 U.S.
Supreme Court Ruling, in which the Justices decided unanimously (9 - 0)
that....
"Inherited IRAs are not retirement accounts" and do not retain the same protections afforded to the original IRA
owner.
The high-court referenced three characteristics
of Inherited IRAs that provide evidence that they are not "retirement
funds" within the meaning of the law that protects "retirement
funds." -- §522(b)(3)(c)
1. The holder of an inherited IRA may
never invest additional money in the account.
2. The holder of an inherited IRA is
required to withdraw money from the account, no matter how far this individual
may be from retirement.
3. The holder of an inherited IRA may
withdraw the entire balance of the account at any time
and use it for any purpose without
penalty.
(However, with an inherited
traditional IRA, the entire withdrawal would likely be taxable as ordinary
income and, depending on the individual's income level, may cause a bump up into
a higher tax bracket for the tax year of the
withdrawal).
Is this important to you?
Ultimately, do you want the money that you saved during your
working years to land up in your son-in-law's or daughter-in-law's account after
a divorce or be awarded to one of your beneficiary's creditors during a
bankruptcy?
Is it important to you that your money provides a lasting legacy
for your children and your grandchildren according to your wishes and not
someone else's?
If so, then estate planning for your retirement
accounts is a MUST DO.
Now is the time to plan ahead.
Do the research on estate planning, and how to use an IRA Trust for your beneficiaries, making informed
decisions that are right for you, your beneficiaries, and your peace of
mind.
5 Benefits of an
IRA Trust
1. Eliminate lump-sum distributions to
beneficiaries with poor money management skills.
2. Protect IRA assets from your
children's spouses in a divorce and/or creditors in a
bankruptcy.
3. The ability to choose an
administrative trustee to distribute your IRA assets for
you.
4. Distribute your IRA assets over a
period of time vs. lump sum distributions to minimize government
taxes
.
5. Permit a Non-Spouse Beneficiary, for
example, a son, daughter, and/or a grandson or granddaughter, to "Stretch-Out"
the Taxable RMD Distributions over their lifetime.
Does this have
applicability to your situation?
We suggest you contact
your financial planner and attorney to determine is this estate planning tool is
applicable to you.
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