Historically, parents often left their tax deferred retirement accounts (IRA, 403(b), 457 plans) to their children outright, or free from trust. In other words, they named their children as direct beneficiaries of these accounts. This traditional method of dealing with retirement accounts often resulted in some unintended consequences. • The child decided to cash in the retirement account and was subjected to massive and virtually immediate tax liabilities. • The child lost out on the tax-deferred growth afforded by the IRS. • The child lost the retirement account balance to divorce, creditors or predators. • The child was a minor or was incapacitated at the time of the parent’s death, resulting in the need to probate this otherwise non-probate asset. These unintended consequences can be easily avoided by leaving your retirement account to your child or grandchild in a specialized IRA Legacy Trust – a trust that comports with all of the IRS requirements to permit your child to “stretch out” the tax deferred growth but also provides asset protection otherwise unavailable when the child is named as a direct beneficiary.
Posted on: Thu, 17 Jul 2014 20:14:03 +0000
Trending Topics
Recently Viewed Topics
© 2015