Choosing a trust as an IRA beneficiary

On behalf of Sachin Dwivedi
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For some people in Wisconsin, using a trust can offer certain estate planning advantages. The estate owner will maintain a higher level of control over their assets and be able to dispense funds responsibly to beneficiaries. Trusts also make it easier to pass on significant amounts of money to minor children in a controlled manner. Because items handled through a trust do not go through the probate system, the allocation process is more private and protected.

At the same time, many people turn to individual retirement accounts (IRAs) to save for their elder years. IRAs can accumulate significant sums over the years, so much that there may be substantial amounts to plan for in case the account holder passes away. When setting up an IRA, a person can name a beneficiary of the account to receive the funds in case of death. A married person may want to choose their spouse, who will be able to roll over the IRA into their own account without a tax penalty.

Someone with a different estate plan may want another option to pass on their IRA. One possibility is to name a trust as the beneficiary recipient. This can be a good option for an estate owner who wants to consider beneficiaries who are struggling with addictions, debt issues or other spending concerns.

IRAs and other retirement and investment accounts can be an important part of an overall estate plan, and the beneficiaries can be changed at any time. An estate planning lawyer can help a client develop a plan and draft key documents like wills, trusts and powers of attorney.