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.
Like another reviewer, I contacted Peter through his website using the free consultation link, for a question regarding PA inheritance taxes. The question was quite technical and difficult to explain, and the answer was nowhere to be found on the web. Peter grasped precisely what I was asking, and provided a clear, helpful response (with a touch of humor) the very next day.
Peter has done our family's trust and estate work since our children were born. He is not only extremely knowledgeable and honest, but makes sure that our arrangements remain current with the changing legal landscape. I would give him my highest recommendation as a professional in his field.
Great firm. Great people. Happy to refer folks in need to estate planning to Peter and his team. They do great work.
Professional, cheerful, thorough and fast. Peter responded to my request for a consultation right away, and within just a few days my last will and living will were done. Rates are standard.
Peter explained a complex subject very clearly, helped us to decide the best approach to managing our estate and then made it very easy for us to execute the required documents. He will be a valuable resource for years to come and clearly has a great understanding of estate law that will lead to innovative solutions for us. I would unhesitatingly recommend him for estate planning.