IRA Inheritance Trusts - Stockton, CA - Walnut Creek, CA

November 7, 2019 — by John Conger
Tags: Ira Trust

Signing legal paperworkLife is unpredictable, and no one knows exactly when they will be taken from their family. While many are uncomfortable talking about death, it is important to plan ahead so that you can continue to provide for your family, even after you have passed away.

The attorneys at Shore, McKinley, Conger & Jolley, LLP can assist our Stockton, CA, and Walnut Creek, CA, clients with estate planning that distributes assets as they see fit, while allowing surviving family members to avoid the time, cost, and complications of probate court. Here, we specifically discuss IRA Inheritance Trusts, and how they allow clients to disburse retirement benefits over time to a beneficiary of their choosing.

What Is an IRA Inheritance Trust?

An IRA Inheritance Trust is a type of living trust that is set up to protect the assets of an IRA, or individual retirement account. This type of account, which is also referred to as an IRA Living Trust or IRA Stretch Trust, is a good option for clients who have a significant amount of funds in their IRA account.

When a person has set up an IRA Inheritance Trust, all money from their IRA account will transfer to the trust at the time of their death. The trust will then provide funds to the appointed beneficiary, which may include a surviving spouse.

Benefits of an IRA Inheritance Trust

When a person passes away, the funds from the IRA account can be transferred directly to their beneficiary. This may seem like a less complicated option than an IRA Inheritance Trust. However, a trust offers a number of benefits and protections that are unique to this type of fund, including asset protection, disbursement control, and tax control.

Asset Protection

Funds in an IRA account are protected from creditors while the account holder is living. However, once a person passes away, most states take that protection away. Fortunately, when an IRA Inheritance Trust is set up, protections stay in place. Money in an IRA Inheritance Trust is protected from creditors, and will stay untouched in the event that the beneficiary is sued, divorced, or files for bankruptcy.

Disbursement Control

An IRA Inheritance Trust can also protect the beneficiary. The trust can be set up in a way that limits how much and how often money can be taken from the account. This prevents beneficiaries from taking out all of the funds at once, and ensures that funds stretch out throughout the beneficiary’s lifetime.

Tax Control

When withdrawals are made from an IRA Inheritance Trust, the money taken out will be considered income, and will be taxed as such. However, because disbursements from an IRA Inheritance Trust can be limited, the amount of tax that a beneficiary will pay on disbursements each year can be controlled.

Conversely, if IRA funds are passed down traditionally, the beneficiary could take all of the money out of the account at once, and would then be responsible for paying income tax on the entire lump sum.

Contact Us

The attorneys at Shore, McKinley, Conger & Jolley, LLP can help you find wealth and estate planning solutions that will work best for your unique situation. We will protect your assets so that surviving family members continue to be taken care of in your absence. To learn more about IRA Inheritance Trusts and estate planning benefits, call (209) 477-8171 to schedule a personal consultation with our attorneys. We serve clients from Walnut Creek, Stockton, and surrounding areas.