Qualified Trust Attorney in Arizona and New Mexico
How are you going to protect your retirement assets from the devastating effects of death taxes, income taxes and creditors upon your death? “Qualified” assets refer to any retirement money on which income taxes have been deferred until the holder begins taking a distribution upon retirement, or until the money is passed to a beneficiary upon death. Different tax rules apply to retirement assets. To protect retirement assets, they must be placed in a “qualified trust.” A qualified trust is a revocable living trust that provides for the distribution of such retirement funds as IRA’s, 401(k)s, 403b’s and SEP’s over the lifetime of beneficiaries, protecting them from creditors, ex-spouses and spend-down for long-term care. To be qualified, a trust must be set up pursuant to complex U.S. Treasury regulations.
Benefits of a Qualified Trust
Money in IRAs and other qualified retirement accounts is protected from creditors while the account holder is still alive. Money taken from such accounts is subject to state and federal income taxes. Upon the death of the account holder, the money remaining in the accounts is distributed to surviving heirs and beneficiaries. Upon distribution, the money is subject to taxes and creditor claims. Funds in a qualified trust, however, are exempt from probate, are protected from creditors and ex-spouses, and receive very favorable income tax treatment.
Morris Hall, PLLC, is recognized as one of the leading estate planning law firms in the Southwest. Our attorneys have extensive experience in all areas relating to federal and state tax laws and qualified trusts. Our clients include many of the most successful individuals and families in Arizona and New Mexico. Minimizing taxes on qualified savings is a cornerstone of every asset allocation and asset preservation plan. Morris Hall attorneys, financial planners and accountants work together to develop strategies for funding options that will protect your significant retirement savings from the devastating effects of death and income taxes, as well as from creditors and ex-spouses’ claims.
Traditional Estate Plans Do Not Meet the Requirements of a Qualified Trust
Very few trusts that have been created, or that are written today, are qualified. That is they do not meet the detailed requirements of IRS code sections 401(a)(9) and the addendent treasury regulations. Morris Hall takes estate planning to a higher level. We create qualified trusts. We will make sure that your retirement assets are protected using every available accounting and legal strategy. There are significant advantages to getting retirement funds into a properly drafted trust at the appropriate time.
Among the many benefits of a qualified trust are the following:
- A surviving spouse can adequately allocate assets between the survivor’s trust and the decedent’s trust.
- Beneficiaries’ shares can be protected from creditors.
- Beneficiaries’ shares can be protected from ex-spouses.
- Beneficiaries can be protected from mandatory spend-down for long-term care.
- Incapacitated beneficiaries and those with special needs can be provided for without losing governmental entitlements.
- Beneficiaries can be protected from waste, immaturity and other spendthrift behaviors.
- Grantors can protect from disinheriting grandchildren or other contingent beneficiaries.
- Younger beneficiaries’ shares can be distributed in proper increments and at appropriate ages.