How an IRA fits in your Trust and Estate Planning?
The big question clients ask us is with regards to, What to do with their IRAs, 401ks, and these pre-tax accounts? and how do those accounts fit into the overall Estate Planning picture? More specifically, how do those specific types of qualified accounts have to be titled when we’re putting together a Trust?
Should the Trust be the owner of a 401k and IRA?
Should the Trust be a beneficiary?
Should it be the kids? Should it be the spouse?
Estate Planning is not just creating that legal structure. We need to figure out how do we tie that legal structure into your Financial plan as well as your tax plan.
With regards to IRA, when we are talking about traditional IRA, they are pre-tax accounts, meaning you have not paid any income tax on them so we have limitations because you’re still in partner with the IRS, you have to pay the tax before you have the freedom to do what you want on that account.
What we can do is name the Trust as the beneficiary of the IRA. Typically, we will name the spouse as the primary beneficiary so they can do a spousal rollover and we would name the Trust as the contingent beneficiary. So when you and your spouse both passed away, it flows into the Trust, and now the children or the beneficiaries can get all the benefits that the Trust may include.
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Castle Wealth Group and Christopher Berry have been helping families with estate planning, elder law, retirement planning, tax planning, and asset protection. It has been their goal to help you keep more of what you worked so hard to earn.
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LEARN MORE ABOUT: IRA Accounts
CONVERTING IRA TO GOLD: Gold IRA Account
CONVERTING IRA TO SILVER: Silver IRA Account
REVEALED: Best Gold Backed IRA
If the IRA is a mutual fund the common practice is to have beneficiaries named in the Mutual Fund. The spouse is the usual primary beneficiary and then a child or children are named as secondary beneficiaries. If the spouse receives the deceased IRA or the children or child receives the IRA if both married couples become deceased then the benefits of the IRA must be distributed within a 10-year period. You may take it out in equal sums or all together but the total amount of the IRA must be depleted within 10 years. You can no longer base withdrawals on the beneficiary's life span. If someone sees an alternative then reply in the comment section.