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.
Tremendous firm with bright, kind and tenacious people. Great representation for our family.
I saw four lawyers and was told by all of them; I should just forget contesting my mother's will. I knew what happened, but it is very hard to prove undue influence. I contacted the Law Offices of Peter L. Klenk & Associates. Attorney Amanda DiChello took my case. They were very honest and upfront about what would be involved trying to prove what I knew was true. Attorney DiChello may be young but she is extremely knowledgeable and skilled. She listened and understood what I conveyed to her. She knew exactly what information to use and crafted an outstanding interrogatory and many powerful depositions. Attorney DiChello understood the various emotional feelings this case created for my family and me; she was always there for us with a kind and encouraging word. We went to trial. The amount of work which she and her Paralegal did for the trial was incredible. They both knew my case inside and out! Attorney DiChello's powerful interrogative and thinking skills produced a positive outcome. Attorney DiChello did what other seasoned lawyers said was impossible!
Mr. Klenk, quickly understood the circumstances presented and provided clear and concise advice. This advice provided me with the information I required to progress the case to my advantage.
We recently used Peter's firm to update our wills and trusts. We found he and his staff to be well-informed, professional and highly efficient. And equally valuable, Peter explains the law in terms that a layperson can readily understand.