Caution: Creditors Now Have Easy Access to Inherited IRAs
Do you have IRAs or other retirement accounts that you plan to leave to your loved ones? If so, proceed with caution. You may not have heard that the law has changed: inherited retirement accounts no longer have asset protection. Those assets can be seized by strangers.
How Can Inherited IRAs Be Protected? The Standalone Retirement Trust
Fortunately, retirement account protection still exists but only if you take action. Many people like you are using Standalone Retirement Trusts (SRT) to protect retirement assets. The SRT is a special type of revocable trust just for retirement accounts.
A properly drafted SRT:
- Prevents the beneficiary from blowing the inherited retirement account on ordinary matters, or exotic vacations, expensive jewelry, designer shoes, and fast cars
- Protects the inherited retirement accounts from creditors, predators, and lawsuits
- Ensures that inherited retirement accounts remain in your bloodline and out of the hands of a daughter-in-law or son-in-law or former daughter-in-law or son-in-law
- Allows for experienced investment management and oversight of the assets by a professional trustee
- Permits you to name minor beneficiaries, such as grandchildren, without the need for a court-supervised guardianship
- Enables proper planning for a special needs beneficiary
- Facilitates generation-skipping transfer tax planning, ensuring that estate taxes are minimized or even eliminated at each generation of your family
The Bottom Line on Protecting Inherited IRAs
Unfortunately, the recent Supreme Court decision has made outright beneficiary designations for IRAs and other retirement accounts risky business. However, we are here to help you decide whether an SRT is a good fit for you. Let us answer your questions about protecting your retirement accounts. We look forward to hearing from you.