If you have named your children as beneficiaries of your qualified plans (IRA, ROTH, 401k, TIAA-CREF, etc.), you have likely made a mistake. An outright beneficiary designation needlessly exposes the IRA to your children’s spouses, to their creditors and future inheritance and estate taxes. Since 2006 Congress has provided the tools necessary to protect your children.
In 2006 Congress required that all qualified retirement plans—including IRAs, SEP-IRAs, 401(k) plans, and 403(b) plans—must allow naming an IRA Trust as a beneficiary. By doing so, Congress allows you to form an IRA Trust for your child that allows the Inherited plan to remain tax-deferred.
Because your child does not own the Inherited IRA, the trust provides shelter from your child’s creditors as well and divorce complications. Further, the IRA Trust excludes the IRA from your child’s estate for death tax purposes. As a bonus, you may dictate that any amount remaining at your child’s death passes to your grandchildren, thereby avoiding your daughter-in-law or son-in-law.
The IRA Trust provides tremendous benefits for your kids with little ongoing costs if the child serves as the trustee.
In short, IRA Trusts provide huge benefits at low cost. The reason you have not heard about them is likely because the rules surrounding IRAs are very involved, which cause many professionals to avoid the issue. This avoidance could cost your family dearly.
If you have any questions about IRA Trusts or any other estate planning topics, please contact our office to schedule a free consultation. For more than two decades Klenk Law has focused only on Estate Law. We’ve seen it all, and this experience allows us to explain complex estate planning techniques clearly and concisely. We make it easy for you to understand IRA Trusts and estate planning so you can make the best decisions for yourself and your family.
When it came down to picking the right attorney to handle my affairs, I knew right away it was this firm. From speaking to their secretary to speaking to Peter I knew I was making the right decision. After only a few mins Peter knew right away what I was looking for and handled all my questions professionally and even gave me great feedback that put my mind at ease. All that without even giving a single penny! So of course I hired him! So far so good...
Peter was excellent. He explained everything very clearly and is super friendly. My wife and I originally tried using a lawyer through group legal coverage, but unfortunately the old adage - "you get what you pay for" - applied to the other lawyer, and we decided to go with a real professional.
Everything about my experience was a 10+! Peter and his staff made what I thought would be a difficult process easy and understandable. Every detail was handled correctly. No other firm could possibly do better than Klenk Law!
Great friendly staff
Peter Klenk was great in leading us in the estate planning process.He was clear in describing the various steps and what they would accomplish. We were well satisfied and pleased that we had Peter to guide us.