How you handle retirement accounts can be one of the most complex aspects of your estate plan. Retirement accounts, such as IRA, 401(K) or 403(b) plans, are pretax assets. Because of the potential tax issues inherent in these funds, it is critical that they be handled properly in your estate plan. Can a living trust be the beneficiary of a retirement account? The typical trust cannot! The overwhelming percentage of existing trusts names them as beneficiary of a retirement plans with triggers up to 40% income tax upon death.
In order to properly name a trust as a beneficiary of your retirement plans, you must have a Qualified Trust. The trust has to comply with the requirements of Internal Revenue Code Section 401(a)(9) and related regulations.
If you have a Qualified Trust, it can (and should) be either the primary or secondary beneficiary of your retirement plans. A Qualified Trust allows your beneficiaries to stretch retirement assets over their life time, while protecting them from creditors, ex-spouses, spend thrift beneficiaries, poor habits and spend-down from long-term care.
You have worked for many years to build retirement accounts and create a plan for your golden years and your beneficiaries. It is important that your estate plan be sufficiently drafted to handle these valuable assets for you and your beneficiaries.
Contributed by MH Phoenix, Flagstaff and Cave Creek Estate Planning Attorney B. West Hunsaker.
Why Choose Morris Hall:
You have a number of options when it comes to estate planning, so why pick Morris Hall? First off, estate planning and asset protection are a very complicated endeavor and you should only trust someone who focuses exclusively on those matters. Also, MH is a proud member of The American Academy of Estate Planning Attorneys (AAEPA) which provides us additional support, advanced training, tools and information that is not available to others – which means that we can better protect your assets and your loved ones. We are one of only two firms in Arizona that belong to the AAEPA and are the only firm in New Mexico that has been granted membership. If you have assets and loved ones that you want to protect, you are in good hands with MH. Contact us today at 888.222.1328 to schedule an appointment!
This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.