Estate Planning: Retirement Plan Trusts  

 Posted on November 22, 2022 in Estate Planning

What is a Retirement Plan Trust?

A retirement trust is a method used in estate planning that provides not only the basic benefits of a trust, but also the tax benefits of an IRA (individual retirement account).

A retirement trust works by establishing the trust and naming the trust as the beneficiary of your retirement accounts upon your death. Your retirement trust will not include your IRA until you pass away. At this point, the person you have selected as trustee of the trust will distribute the funds to your named beneficiaries according to the terms you included in your trust.

Retirement Plan Trust Lawyers in Plainfield and Kendall County, Illinois

What are the Benefits of a Retirement Plan Trust?

First, the major benefit of a retirement plan trust is reducing taxes taken on your retirement accounts and taxes taken on the distributions of those funds once they are in the trust. A retirement plan trust does this because it allows you to distribute money to your heirs in smaller amounts. Your trust will have language about distributing the funds to your beneficiaries in the RMD (required minimum distribution). Paying out funds in the RMD amount results in less taxes being taken out on those funds.

Additionally, this method of payment in smaller amounts reduces the chance of a mismanagement of the funds by the beneficiaries. Further, the trust provides protection from creditors if, for example, your beneficiary were to file for bankruptcy or go through a divorce. Because of the trust, those creditors will not be able to access those funds to resolve the beneficiary’s debts.

Experienced, Reputable Estate Planning Attorneys Serving Oswego, Plainfield, Yorkville and Kendall County

Estate planning goals are unique to each person’s situation. It is important to have the assistance of knowledgeable and experienced estate planning attorneys to ensure that all of your goals are met in the most efficient way for you and your family. That is why estate planning is strongly recommended for everyone, regardless of age of financial status.

Without a proper plan in place, the process of settling a person’s estate after they die can be emotional, costly, and overwhelming for the loved ones that are tasked with doing so. Planning ahead of time can help protect beneficiaries of your property, reduce the amount of taxes taken by the IRS when transferring assets, and helps to eliminate family disputes that can arise during the distribution of an estate.

At Peace of Mind Asset Protection, LLC we have the proper knowledge and experience to assist with the best estate planning option for you. Contact us today at 630-780-1034.