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This educational video about IRA Beneficiary Trusts was produced by California estate planning & elder law attorney Randall F. Kaiden. This video talks about IRA Beneficiary Trusts. Despite what many people believe, you can name a trust as the beneficiary of an IRA and STILL stretch out the distributions from that IRA for a very long time. Such trusts are called conduit or see-through trusts. One must be careful when they set up (i.e. an attorney drafts) this type of trust but its unique advantages outweigh the complexities. For example, with this type of trust, you can provide for both a spouse after you pass away as well as your children from a prior relationship. Without it, one or the other, could end up with none of that IRA. And as of 2014, under the Supreme Court decision in Clark v. Rameker, inherited IRAs are no longer protected from creditors! But with an IRA Retirement Trust, you can stretch out retirement accounts while affording your beneficiaries with creditor protection, forever.

Randall F. Kaiden, founding attorney at Kaiden Elder Law Group, PC (and The Trust Store-our online portal), was born and raised in Los Angeles. In 1998, he began working in tax, estate planning and probate law. Soon thereafter, he added Medi-Cal & Veterans Planning to his practice. Since that time, he has been VA Accredited to represent claimants before the Department of Veteran’s Affairs. He is a member of Elder Counsel, Wealth Counsel and the National Academy of Elder Law Attorneys. His practice is elder-centered, helping people respond to the challenges associated with chronic illness or disability as well as focusing on asset preservation, probate avoidance, tax reduction, trusts and estates.

Attorney: Randall Kaiden, Esq.
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These online videos and reading materials were prepared by Randall F. Kaiden, Esq. and for informational purposes only. They therefore DO NOT CONSTITUTE LEGAL ADVICE OR SERVICES. Watching and reading the information contained here is not intended to create an attorney-client relationship. Do not rely upon any information you receive here for any purpose without seeking independent legal advice from a licensed attorney in your State. The information provided here is very general and may or may not reflect the most current law. Thus, the information contained here is not promised or guaranteed to be correct or complete. Nothing contained on this website or retransmitted on any other is intended to be used or relied on, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended. TAXPAYERS MUST SEEK INDEPENDENT TAX LEGAL ADVISE FOR THEIR OWN PARTICULAR CIRCUMSTANCES, WITH RESPECT TO ANY TRANSACTION OR MATTER CONTAINED HEREIN. Randall F. Kaiden expressly disclaims all liability in respect to actions taken or not taken based on any and all of the information (in any format) provided here….(read more)

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As an Individual retirement account (IRA) owner, you have control over the assets within the account while you are alive. However, once you pass away, the assets in the account become a part of your estate and are subject to the distribution rules and tax implications laid out by the government. One way to mitigate these issues is by creating an IRA Beneficiary Trust.

An IRA Beneficiary Trust is a legal entity designed to receive and manage distributions from the IRA account after the death of the account owner. This type of trust can provide numerous advantages to both the IRA owner and their beneficiaries.

The primary advantage of an IRA Beneficiary Trust is the protection it offers to the assets within the account. When an IRA is directly inherited by a beneficiary, the assets become part of their personal estate and are subject to the claims of creditors, ex-spouses, or other lawsuits. However, when an IRA is directed to a trust, the assets are protected from such claims, ensuring that the trust’s named beneficiaries receive the intended distributions. Additionally, an IRA Beneficiary Trust can protect the assets from potential future estate taxes.

Another benefit of an IRA Beneficiary Trust is the flexibility it provides in distribution planning. The trust document can be crafted to accommodate various distributions based on the individual needs of the beneficiaries. For instance, the trust can stipulate that the beneficiary receives a specific amount of money or percentage of the IRA each year. The trust can also set forth the age at which beneficiaries receive the distributions.

Furthermore, this type of trust can offer the opportunity to control how the assets within the IRA are invested. This can be particularly important in cases where the IRA owner is concerned about the investment acumen of their beneficiaries or if the beneficiaries are minors or people with special needs who may require special investment guidance.

It’s important to note that an IRA Beneficiary Trust is not for everyone, and certain factors should be considered before setting one up. For instance, the cost of establishing the trust can be higher than the other options, such as directly naming beneficiaries. Additionally, the IRA owner must name the trust as the beneficiary of the IRA, which may limit post-death flexibility, such as the ability to roll the IRA over to the surviving spouse.

In conclusion, an IRA Beneficiary Trust can be an ideal way to protect and control the assets within an IRA. By creating this type of trust, individuals can take advantage of the tax benefits of an IRA while ensuring that their beneficiaries receive the intended distributions and have the flexibility to accommodate individual needs. However, a careful consideration of the costs and limitations of this type of trust should be made before deciding whether it is the right choice for your situation.