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Should You Place Your Retirement Accounts in a Trust?

People who succeed in saving substantial financial assets in tax-deferred retirement accounts usually wind up leaving a good portion of these assets to their heirs. And while you may wish that your heirs would protect these assets as long as possible, the fact is that a majority of beneficiaries cash out their inheritances within the first year.

If heirs are to benefit over the long-term from what remains in tax-deferred retirement accounts, they would be wise to leave the money where it is and take advantage of what is known as the “stretch” – where distributions are made over time, according to an heir’s age at inheritance and life expectancy. If a young child inherits, this could result in a significant accumulation of assets growing tax-deferred.

To make this happen, you can create a trust that will allow for the accumulation of the distributions and pay them out over time. The benefits of establishing this kind of trust include:

  • If the heir is a minor child, a guardian will not be needed to manage the assets, since the trust is the beneficiary,
  • You assure tax-deferred growth of assets since cashing out is not an option;
  • The trusts protects the assets against an heir’s potential creditors, divorce settlement, or other financial problems;
  • You are able to name successor beneficiaries so assets pass as you wish;
  • The trust can protect an heir with special needs by not compromising their qualification for federal benefits.

Contact our Fort Myers estate planning law firm for a complimentary consultation on estate planning and asset protection strategies.

Categories: Retirement Planning, Trusts
dorcey law firm
The Dorcey Law Firm, PLC - Fort Myers Attorney
Located at 10181 Six Mile Cypress Pkwy, Suite C, Fort Myers, FL 33966
Phone: (239) 330-6674
Local Phone: (239) 418-0169