During your entire working life, you’re likely contributing to Individual Retirement Accounts (IRAs). While the aim of these accounts is to create assets and investments for your golden years, you may find you don’t end up using all of your retirement money. In fact, your IRA may represent one of the largest assets you have to pass on to your children, grandchildren and other family members.
Unfortunately, without careful estate planning and legal advice from an IRA beneficiary trust attorney in Berks County, PA or your community, it’s possible to make expensive mistakes, preventing your loved ones from enjoying the full assets they may be entitled to after years of your hard work.
How IRA Beneficiary Trusts Protect You and Your Family in Pennsylvania
Many people don’t even think about IRAs as part of their estate planning, especially since retirement accounts usually allow you to name a beneficiary. On the surface, it would appear the assets in your retirement account automatically transfer to your beneficiary.
In reality, simply having the IRA transfer to a beneficiary can result in considerable tax losses as well as other problems. Working with an IRA beneficiary trust attorney in Reading, PA to develop a trust means the assets in your IRA are transferred to the trust, not directly to your beneficiaries.
The Advantages of IRA Trusts
There are three main advantages to having your IRA transfer to a trust:
- You exert more control. If you set up your IRA early in your working career, you make a choice about a beneficiary. You may list a parent, current spouse or child. However, over time you may get divorced, your parents may pass on and many other events can happen in your life. Despite this, not everyone remembers to update their beneficiaries. With an IRA trust, you can name a beneficiary and also a contingent beneficiary, or someone who will inherit the IRA in the event your beneficiary passes on before you do. With an IRA beneficiary trust, you’re more likely to have updated and correct beneficiaries, so your IRA is bequeathed according to your wishes.
- It protects the IRA from withdrawal. An IRA trust can be set up so withdrawals can be limited, ensuring your beneficiaries can’t overdraw on the IRA, so they won’t be violating tax rules or limiting interest or tax-free increases in the account.
- A trust protects the IRA from beneficiaries. If your beneficiary is a minor, he or she may not be able to withdraw the money. With a trust, you can name a trustee and still leave the money to a child or other minor. If your intended beneficiary has special needs, a trust can ensure they have a trustee to help guide them in financial decisions. Should you wish to leave your IRA to someone who has financial difficulties, marital problems or other challenges that could lead them to overdrawing the account or having the IRA targeted by creditors or bankruptcy proceedings, a trust can protect the assets in the IRA from legal proceedings.
Work With an IRA Beneficiary Trust Attorney in Reading, PA
If you’re ready to protect one of the largest assets in your arsenal, contact Miller Law Group for your personalized consultation. Through our offices in Reading, Pennsylvania, we serve clients in Berks County, Reading and across the region. We’d be happy to sit down with you to help you understand your estate planning needs to help you protect your assets, your loved ones and your estate.