Suppose you have an Individual Retirement Account (IRA) which is not fully depleted at the time of your death. You should consider two important questions: 1) Where do you want that money to go? 2) How do you want it to be distributed? The Standalone Retirement Trust can address this real possibility.
Now, you can name a specific beneficiary (or beneficiaries) for your remaining IRA funds. However, 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.
There are some negatives in giving this IRA remainder as a lump sum. It could incur a significant tax liability. Some folks also worry about a lump sum payment resulting in unwise spending decisions by the beneficiary or becoming subject to possible creditor claims, divorcing spouses, or lawsuits and judgments. So, what should you do when considering estate and trust planning?
Upon your death, generally speaking, an IRA plan administrator will contact the beneficiary and ask how he or she would like to receive the proceeds. The options they usually give is; lump sum or small payments over a period of time.
Maybe your beneficiary is still very young. Maybe they are not as responsible with money as you might prefer. These situations, and others, are what lead to those with IRA accounts to prefer that their beneficiaries not have the option to receive the funds all at once.
The Standalone Retirement Trust (SRT) is a legal entity designed to hold and protect retirement assets, such as individual retirement accounts (IRAs) and 401(k) plans. The primary purpose of an SRT is to provide a way for individuals to pass on their retirement savings to their heirs while maintaining certain tax advantages and asset protection benefits.
In situations where you are not comfortable leaving large sums of money to a beneficiary, an SRT might be a useful tool to consider.The Standalone 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 Standalone Retirement Trust will oversee the distribution of the funds to your heir(s) in a manner you see fit.
By utilizing The Standalone Retirement Trust you will be able to have significantly greater control over the manner in which your remaining retirement funds are distributed to your loved ones, rather than just control who will receive the funds after you die—as is the case with leaving your IRA through a simple beneficiary designation.
Depending on your circumstances, some other useful benefits of a Standalone Retirement Trust may include:
Do you question the need for attorney guidance with so many online resources? Because laws and regulations are complex, and because every person has a lot at risk, more people than ever are seeking professional guidance from an experienced, knowledgeable source. That helps explain the rapid growth of our firm. Whether you happened upon this website by accident or are one of the many referrals we receive from a nearly 15-year collection of satisfied clients, our staff can provide customized estate planning guidance for you. Call us. Our number: 1 (772) 218-0480