================================
Sign up for email list here.
Get Your Own Pablo Retirement Gear:
Follow me censorship-free!
My course “Can I Retire” will help reduce your stress when it comes to retirement planning.
Get it here:
and don’t forget there IS a 30 day money back guarantee if you’re not satisfied!
Get my books on Audible here:
Want to support what I’m doing for $10 a month?
Join my SubscribeStar page!
My Amazon Product page:
Anything you buy there Amazon pays me a commission. Much appreciated!
GET MY BOOKS:
ALL are FREE to Kindle Unlimited Subscribers!
You Can RETIRE on SOCIAL SECURITY:
The Tax Bomb In Your Retirement Accounts: How The Roth IRA Can Help You Avoid It:
Strategic Money Planning: 8 Easy Ways To Put Your House In Order
GET ALL MY LATEST BLOGPOSTS:
…(read more)
LEARN MORE ABOUT: IRA Accounts
TRANSFER IRA TO GOLD: Gold IRA Account
TRANSFER IRA TO SILVER: Silver IRA Account
REVEALED: Best Gold Backed IRA
When it comes to planning for retirement, many people choose to designate their spouse or children as beneficiaries of their retirement accounts. However, there is another option that should be considered: naming a trust as the beneficiary of your retirement accounts. While this may not be the best choice for everyone, it can offer several benefits that may make it the right option for you.
One of the main reasons to consider naming a trust as the beneficiary of your retirement accounts is that it allows you to maintain control over how your assets are distributed after your death. This is especially important if you have young children or heirs who may not be financially responsible. By setting up a trust, you can specify exactly how and when your assets are distributed to your beneficiaries, ensuring that they are used in a way that aligns with your wishes.
Naming a trust as the beneficiary of your retirement accounts can also offer protection for your assets. If your heirs were to inherit the funds directly, they would be exposed to potential creditors, lawsuits, or divorce settlements. However, by passing the funds through a trust, you can shield them from these risks and ensure that they are used as intended.
In addition, naming a trust as the beneficiary of your retirement accounts can provide tax benefits for your heirs. Depending on the structure of the trust and the specific provisions you include, your beneficiaries may be able to take advantage of tax deferral or other advantages that could maximize the value of the assets they inherit.
However, it’s important to understand that naming a trust as the beneficiary of your retirement accounts is not a decision to be taken lightly. There are several considerations to keep in mind, including the potential tax implications and the cost of setting up and maintaining a trust. Additionally, you will need to work with a qualified estate planning attorney to ensure that the trust is structured in a way that aligns with your goals and objectives.
In conclusion, naming a trust as the beneficiary of your retirement accounts can offer several benefits, including control over how your assets are distributed, protection for your heirs, and potential tax advantages. However, it’s important to carefully consider the implications and work with a professional to ensure that this is the right choice for you. By doing so, you can help ensure that your hard-earned retirement savings are used in a way that aligns with your wishes and provides for the financial security of your loved ones.
One attorney will tell you one thing while another attorney, in the same area, will tell you something else.
Very helpful. Thank you!
Oh dear. I had an attorney set up a trust for me years ago. I have no spouse. So everything will go to my siblings, nieces and a friend. The o ly things I have are retirement accounts (TSP and IRAs), a brokerage account, my condo (no investment properties) a car and household contents, including quite a bit of art. Should I not have a trust? I thought I was protecting my assets from probate.
Good advice, my parents had the beneficiaries of their IRAs their revocable trust, as recommended by the lawyer. We switched financial advisor and that was the first thing he noticed. He explained the rational and we changed the beneficiaries to 50/50 with me and my brother. Thanks for sharing this video.
Excellent session Josh!
What if you dont't have children ir you disinherit them? It isn he point of the trust that it can't be changed. If your have children, wife and they diserve your money putting living trust as IRA beneficiary is a bad idea.
Could you make a video where you go over these trusts and how you grant assets to them and how they work
Trusts are pushed by attorneys for the same reason that working longer and saving more is pushed by financial planners: their gain, not yours. There is almost zero reason for a trust except in unusual or extreme circumstances like those you mention. I hear so many people saying they want to do trusts and my response is always the same as your: why? Every single time the reason they have is based on erroneous or incomplete information and they have not truly dug deep into the full story concerning the downsides.
The average doesn't need a trust. If you have beneficiaries to your investment accounts and your home is titled TOD " transfer on death " and a Will (very little goes through the Will).
A good rule of thumb to set up a trust as when your kids are 40 years old then if you're dead they can get it if they're not straighten up by 40 there is no chance for them anyway
We just went through this. My wife's parents set up a trust. It named two charities as well as my wife and her nephews. The trust was split, her dad had half and her mom half. What happened was the trust was supposed to keep maintenance for her mom and it did. She had access until she passed. But what happened 10 years earlier is half of the value of the estate was set at her father's time of death. Creating a situation that began a long term capital gain on the future value which was significant. It cost 6 figures in capital gains taxes for the wife and nephews. It would have been much better had they just let his wife be the beneficiary 10 yrs ago and then she had a will that had beneficiaries when she passed. Half the current value got no step up in basis because it went into a trust 10 years ago, triggered capital gains 10 years subsequent. Trusts suck. Don't do trusts. Simple wills are better.
I’m in Florida and my trust Attourney told me that retirement accounts should never be owned by a trust. The state of Florida already protects them from creditors or litigation, so no trust protection is needed.
Great information, thanks.
If you have a Roth IRA, the trust as beneficiary shields the IRA from creditors and divorce. Inherited IRAs get very little asset protection in most states. Naming a beneficiary in your trust meets the see through criteria provided the trustee notifies the IRA plan by October 31 after death. The trust then gets to use the named beneficiary status and avoid the fivefold year rule.
The trust provides asset protection for the un distributed traditional IRA. Yes, for tax reasons., the trust should distribute the RMD to beneficiary. The principal remains protected through the 10 years.
The trust will be doing the same processes for the taxable accounts in the trust: retaining principal, distributing income and gains to beneficiary recorded on a K-1 and avoiding the 37 percent rate.
Older trusts had issues relying on the IRS distribution schedules. After the Secure Act, no RMD exists until the end of 10 years. The trustee could not execute annual RMDs. This left a huge taxable distribution at ten years. Trusts now written give the trustee power to distribute to max tax savings.
You overstate the complications. If the grantor discusses the plan with the trustee/beneficiary, you give your beneficiary the power and protection. A lot can happen over those 10 years when your beneficiary is 55 plus.
I am not a lawyer, but decided to use the trust as beneficiary for reasons described. Also, in TX, you do not need a separate trust for retirement accounts allowing you to leverage any oversight efforts in a single trust. Using the trust forces the beneficiary, acting as trustee.to consider possibilities, even when they have full control.
We have only one primary beneficiary of estate upon our passing, our son. Our goal is to protect any inheritance received from any potential divorce, thus the reason we named the Trust as contingent beneficiary within our IRA's, life insurance, and property.
Only an individual can have a Roth IRA. Only an individual can inherit a Roth IRA tax-free. Roth IRAs should remain outside a trust.
Not only do you need to empty an IRA in 5 years when left to a trust, it is also then taxed at trust tax rates and anything over $13,451 in 2022 is taxed at 35%.
Good video and perspective. I will have to look into the 5 year period mentioned for trust beneficiaries. I know inherited IRA is now 10yr to fully distribute and as you mentioned we must wait on final IRS rule/guidance. I wonder how many 18yo's would be responsible and smart with 6 digit sums distributed in a lump sum (even without dependence issues or special needs).