As top retirement plan trust attorneys in St. Louis, we’ve helped countless Missourians protect their retirement accounts. No matter what your estate planning goals are, the Law Office of David S. Schleiffarth is here to make them a reality. Call us at (314) 448-0527 to get started.
Establishing a Retirement Plan Trust
Everyone deserves the peace of mind that comes from knowing their hard-earned savings won’t be squandered after they’re gone. However, many make the mistake of assuming it’s out of their control. Luckily, they’re wrong.
If you’re concerned about how your retirement savings will be used after your death, you’re not alone. Many clients come to us with anxiety about how their retirement account funds will be taxed and distributed after they pass. They want to know that their legacy will continue and that the money they spent a lifetime accumulating will be properly handled.
By establishing a retirement plan trust, you can ensure your loved ones get the most out of your retirement account. These types of trusts are just one of the many ways that our estate planning attorneys help clients to keep more of their wealth and protect their families’ financial futures.
Keep reading to learn more about retirement plan trusts, their benefits and why so many St. Louis residents choose to partner with our firm.
Are you concerned about your family’s financial future? Find peace of mind when you partner with one of our estate planning specialists. Getting started is easy—simply contact us online to set up your initial consultation.
What Is a Retirement Plan Trust?
Paying into an individual retirement account (IRA) is an excellent way to ensure your golden years are financially stress free. If you’ve spent decades diligently padding your pension, you may have saved more than you’ll be able to spend in your lifetime. After you pass away, the remainder of your retirement plan assets will pass to your designated beneficiaries without going through probate.
Depending on your family dynamics and your beneficiaries’ financial obligations, this situation may be less than ideal. Their inheritances may be subjected to taxes and creditors, or your beneficiaries may be too young. One way to avoid the rapid depletion of funds in these scenarios is to establish a retirement plan trust.
How It Works
A retirement plan trust (also called an IRA trust) is a type of trust that acts as the beneficiary of your retirement account upon your death. In addition to providing tax benefits and protection against lawsuits, creditors and spendthrift beneficiaries, an IRA trust allows you greater control over how your retirement funds will be allocated.
Here’s a simple breakdown of how the retirement plan trust works:
- A special trust is created to receive some or all of IRA owner’s funds upon their death.
- The trust is named as the IRA beneficiary.
- Upon the IRA owner’s death, the funds transfer automatically to the IRA trust.
- Beneficiaries receive distributions from the trust, in accordance with its design, required minimum distributions and tax rules.
Although the overall process is straightforward, there are myriad considerations when establishing any trust. An experienced IRA trust attorney can help you navigate its complexities to make sure your financial goals are achieved.
Our Retirement Plan Trust Attorney Is Here to Help!
At the end of the day, IRA trusts can offer numerous benefits—but they’re not for everyone. The good news is that no matter your financial situation and goals, there is an ideal estate planning tool for you, and we can help you find it.
As top estate planning attorneys in St. Louis, we’ve helped countless clients achieve asset protection and peace of mind. Ready to secure your family’s financial future? Schedule a case evaluation
Or, give us a call at (314) 448-0527 to speak with one of our estate planning experts directly.
The Types of Retirement Plan Trusts
Trusts are a popular, effective way to protect your assets, and they come in many different forms. When you’re ready to establish your IRA trust, you’ll choose between a conduit trust and an accumulation trust, each of which offers a distinct set of benefits.
Conduit Trusts
As the name implies, a conduit trust simply acts as the vehicle between your retirement account and your intended beneficiary. The trust is the beneficiary to your IRA, and an individual is named as the beneficiary of that trust. In essence, the conduit trust provides your retirement funds a smooth, safe passage from IRA to beneficiary, protecting it from creditors.
It’s important to note that the conduit trust requires a series of minimum distributions or withdrawals each year, which means that its beneficiary must withdraw a mandated amount each year.
Accumulation Trusts
In contrast to conduit trusts, accumulation trusts do not require yearly minimum payouts. As a result, accumulation trusts are ideal for people who are trying to grow their wealth over generations; they also serve as a powerful asset protection tool for those trying to avoid litigation.
Although accumulation trusts successfully avoid inheritance tax, their gains are subject to regular income tax. As tax liability depends on a variety of factors that may change over time, it’s a good idea to consult with your retirement plan trust attorney before adopting this particular trust into your estate plan.
IRA Trusts: Protections for Beneficiaries
Although the specific reasons vary from person to person, the majority of clients who set up an IRA trust have the same overall goal: to pass as much of their hard-earned money along to their beneficiaries as possible.
The main issue with naming an individual beneficiary to your retirement account rather than creating a trust is that it leaves their inheritance vulnerable to certain life circumstances. An IRA trust can help protect your designated beneficiary from the following:
- A divorcing spouse
- Rapid, irresponsible spending
- Bankruptcy
- Excessive taxation
- Lawsuits
- Asset limitations for disability assistance and special needs health care
Ultimately, an IRA trust provides a structure for asset protection. It shields beneficiaries against potential risks to their inheritance, protecting them from creditors and others who would make claims for the assets.
Retirement Plan Trusts: FAQs
Estate planning is complex, and understanding the pros and cons of a particular tool can take years to master. When you’re ready to strategize together, our retirement plan trust attorneys are here to take your call. In the meantime, learn more about IRA trusts with our FAQ.
Who is the trustee?
Just like with other trusts, you’ll need to establish the role of trustee when you’re creating your IRA trust. The job of the trustee is to ensure that funds from the retirement trust can only be distributed to beneficiaries, or to people who are making payments on their behalf.
Can the beneficiary designation also be the trustee?
If your trust beneficiary is old enough, you can name them as trustee. However, it’s important to understand that there are significant fiduciary responsibilities associated with this role, and it should be appointed carefully.
What types of savings accounts qualify for a retirement plan trust?
You can name an IRA trust as beneficiary to all types of individual retirement accounts, including traditional, Simplified Employee Pension (SEP) and Savings Incentive Match Plan for Employees (SIMPLE) and Roth IRAs.
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