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IRA and Retirement Plan Inheritance Trusts

The Law Offices of Kennedy & Jackson
Houston, Texas
713-783-7444 | Email

IRAs are where most people deposit their 401(k) funds, making them a major source of wealth. Often, an IRA is the single largest asset a family may possess. An IRA inheritance trust is the answer to the question, “What happens if I pass away before using my IRA?”

Often, when an heir inherits the proceeds of an IRA or other retirement plan, he or she withdraws all of the funds immediately. Once he or she withdraws these funds, he or she will be liable for income taxes on the entirety of the IRA. Additionally, if an heir receives an IRA through an inheritance, the proceeds of the IRA could be lost in a divorce, or subject to creditors.

An IRA inheritance trust will stretch the IRA over a long period of time, ensuring continued deferral of income taxes and maximizing the value of the IRA or retirement plan.

To establish an IRA or retirement plan inheritance trust, it is necessary to name a trust as the beneficiary of your IRA. Next, designate your intended beneficiaries, usually your children, as the beneficiary of the IRA trust. By doing so, you can ensure your children stretch the IRA, and protect the distributions.

THE BENEFITS OF A TRUST AS OPPOSED TO A STRAIGHT INHERITANCE

Besides deferring income taxes, there are other benefits to an IRA or retirement plan inheritance trust. With an IRA inheritance trust, you receive legal guidance regarding the advantages and disadvantages of such a trust, whereas with a beneficiary designation form, you receive no legal guidance at all. Additionally, there is spendthrift protection if you feel potential heirs will spend the proceeds of the trust too freely. An IRA inheritance trust can also protect heirs from losing potential government benefits.

OBTAIN LEGAL ADVICE REGARDING IRA INHERITANCE TRUSTS

At The Law Offices of Kennedy & Jackson, we focus our legal practice exclusively on matters relating to estate planning, asset protection and probate administration. Both of our probate attorneys are board-certified in estate planning and probate law by the Texas Board of Legal Specialization.

We have decades of experience creating asset protection plans and estate plans on behalf of individuals and businesses with all types and levels of wealth.

CONTACT THE LAW OFFICES OF KENNEDY & JACKSON

Our law office is located in the Galleria area of Houston, with free on-site parking available next to our office building. We provide a complimentary — and confidential — initial consultation to all new potential clients.

To schedule an appointment with one of our lawyers, call 713-783-7444 or send us an email.