IRA Trust Beneficiary Rules

Who would benefit or even require an IRA Trust?  

We have compiled some IRA trust beneficiary rules.  Use these five quick checkpoints to help determine if you need an IRA trust.  If you have a large IRA or any of your beneficiaries have one or more of these:

  • Receives public assistance – any IRA account balance applies
  • Is a minor (consider contingent beneficiaries, such as grandchildren)
  • Problems managing money
  • May in the future get a divorce
  • May have, now or in the future, creditor issues or a bankruptcy

Stated differently, if you have beneficiaries who are disabled, incompetent or unsophisticated (vulnerable to those seeking money).

Ed Slott's Retirement Road MapIf any of these are true for you, you need our comprehensive planning process regarding IRA trusts.

You know how hard you worked to amass the money you have in your retirement accounts. Naming a trust as beneficiary comes down to controlling the distribution of the IRA (i.e., to better control post-death distributions and restrict access to beneficiaries who might otherwise squander inherited IRAs). Setting up an IRA Beneficiary trust helps ensure the money lasts as long as possible.  That is to employ the provision that allows an IRA to be “stretched” for up to 85 years after you have passed away.

IRA trust beneficiary rules

Keep in mind that simply calling a trust an IRA Trust does not mean it will stand up to the various tests the IRS would subject the trust to.  We have created a checklist to help ensure these various items have been addressed.  A couple of years ago two separate couples came through our office with fancy IRA trusts.  The attorney had even service marked their work.  Very fancy!  However, these trusts had language in them that could not get through our checklist.  This means that when or if the IRS were to review the trusts they would be found invalid.  The fallout would be all around taxes and penalties assessed by the IRS.

If you are considering an IRA trust please reach out and ask about either our trust review or having our legal team create your trusts.  Yes, that was plural.  We believe firmly in creating a trust for each beneficiary. Don’t worry – we like to treat you the way you want.  Meaning – a fair price for the work completed.

By now you know that this sounds like an idea you need to investigate – or – you believe you have it handled.  Well, here is a PROMISE – if we fail to expose an issue with your IRA or your IRA Trust we will REFUND our beneficiary or trust review fee ($225).

Give us a call 408-459-8383 or fill out this form:

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