Over the years, people have become more aware of the benefits of contributing to retirement plans. And with baby boomers retiring, the question becomes how to protect this investment if they don’t spend it all. Realizing that the money coming out of retirement plans is, for the most part, subject to income tax, planners previously focused on providing a way for the children to stretch payments out over their lifetime to lessen that tax.

With the passage of the SECURE Act, the landscape has changed.  Now children generally have only 10 years to take the money out of the inherited IRA. The Supreme Court ruled that an inherited IRA is not protected against creditor claims. Suppose the children are not mature enough to handle the money? What happens if a creditor tries to take it from them? 

Enter the Standalone Retirement Trust

This trust can become the beneficiary of the retirement plan and, if drafted properly, can accumulate the funds until the children are mature enough to deal with it. In addition, while the assets are held by the trust, creditors cannot attack it. This means that if the beneficiaries need to take the money out over the 10-year period, they will still be subject to income tax on funds taken out, but the balance of the money is protected for the family. 

The rules regarding these trusts are very complex, and it’s important to seek an advisor well-versed in this planning strategy. Contact us today to schedule your initial consultation and determine if a Standalone Retirement Trust is right for you.


Schedule your consultation and determine if a this trust is right for you.

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