During your lifetime, your retirement account has good asset protection, but as soon as you pass that account to a loved one, that protection evaporates. This means one lawsuit and POOF! Your life long, hard earned savings could be gone. Your heirs could be left penniless.
Fortunately, there is a solution to this problem. A special trust called a “Standalone Retirement Trust” (SRT) can protect inherited retirement accounts from your beneficiaries’ creditors.
When your spouse, child, or other loved one inherits your retirement account, their creditors have the power to seize it and take it as their own.
If you’re like most people, you’re thinking of protecting your retirement account so your family can benefit – rather than the creditors. Here are 5 reasons to protect your retirement account:
- You have substantial combined retirement plans. Spouses can use an SRT to shield one or the other from creditors.
- You believe your beneficiary may be “less than frugal” with the funds. Anyone concerned about how their beneficiary will spend the inheritance should absolutely consider an SRT as you can provide oversight and instruction on how much they receive – and when.
- You are concerned about lawsuits, divorce, or other possible legal actions. If your beneficiary is part of a lawsuit, is about to divorce, file for bankruptcy, or is involved in any type of legal action, an SRT can protect the inherited retirement accounts from those creditors.
- You have beneficiaries who receive assistance. If one of your beneficiaries receives, or may qualify for, a need-based governmental assistance program, it’s important to know that inheriting from an IRA may cause them to lose those benefits. An SRT can be drafted to avoid disqualification.
- You are remarried with children from a previous marriage. If you are remarried and have children from a previous marriage, your spouse could intentionally (or even unintentionally) disinherit your children. You can avoid this by naming the spouse as a lifetime beneficiary of the trust and then having the remainder pass onto your children from a previous marriage after your spouse’s death.
You’ve Worked Hard To Protect & Grow Your Wealth – Let’s Keep It That Way
You worked hard to save the money in those retirement accounts and your beneficiaries’ creditors shouldn’t be able take it from them. Give me a call at (858) 432-3923 and let me show you how an SRT can help you protect your assets as well as provide tax deferred growth.