Retirement Plan Trusts

 

Given the enormous amount of wealth held in retirement accounts, it is critical that individuals properly name the beneficiaries of these assets and protect them from creditors, predators and lawsuits. During your lifetime, your retirement funds have asset protection and, therefore, cannot be taken in a lawsuit.  Unfortunately, as soon as retirement accounts are inherited, the shield of creditor protection evaporates.  In order to remedy this problem, the creation of a retirement plan trust should be considered.
 
A retirement plan trust is a special type of revocable trust.   In addition to creditor and predator protection, a retirement plan trust offers the following advantages:

 

• Divorce protection.  Keeps the retirement funds within the family bloodline and out of reach of the beneficiary’s soon-to-be ex-spouse and his or her children from a previous marriage.

• Lawsuits.  Protects the funds in the event of a lawsuit against the beneficiary.

• Spendthrift protection.  Prevents a beneficiary from squandering the funds through reckless spending or gambling.

• Special needs planning.  Protects the funds for a special needs beneficiary without jeopardizing his or her state assistance and, instead, allows for proper planning for such beneficiary.

• Minor beneficiaries.  Allows minor beneficiaries to enjoy the funds without the need for a court-appointed guardian or conservator.

• Investment management.  Allows for experienced investment management and oversight of the account assets by a professional trustee.

• Tax Planning.  Facilitates generation-skipping transfer tax planning to ensure that estate taxes are minimized or eliminated at each generation.

 

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