Warning: Don’t Let Creditors Inherit from You

May 30, 2019 | Estates Planning and Asset Protection

Shocking to most people, the retirement account you leave for your spouse can be seized in a divorce, lawsuit, or bankruptcy.

3 Options Available To Surviving Spouses

When your surviving spouse inherits your IRA, he or she generally has three options:

  1. Cash out the inherited IRA and pay the income tax.  

WARNING! The cashed-out IRA will not have creditor protection and accelerates taxation.

  1. Maintain the IRA as an inherited IRA.  

WARNING! The inherited IRA will not have creditor protection. 

  1. Roll over the inherited IRA and treat it as his or her own. 

WARNING! This may offer some creditor protection; however, not in all cases. 

It’s frustrating to many that a stranger can swoop in and take their hard earned money; fortunately, there’s a solution and that solution is a retirement trust.

Standalone Retirement Trusts Provide Protection

A Standalone Retirement Trust (SRT) is a special type of trust designed to be the beneficiary of your retirement accounts after you die. It can protect your assets from your beneficiary’s creditors.  In fact, we can include trust provisions which specifically benefit your spouse in situations such as:

  • Second marriages
  • Divorce
  • Lawsuits from car accidents, malpractice, or tenants
  • Business failure
  • Bankruptcy
  • Medicaid qualification  

Want To Know More?  

The bottom line is that a properly drafted SRT is often your best option for protecting your retirement assets (and providing the bonus of tax-deferred growth). Want to know more?  Contact us today to schedule a conversation. We look forward to working with you.  

You may also like
May Is National Elder Law Month—Do You Have Your Plans in Place?

May Is National Elder Law Month—Do You Have Your Plans in Place?

May is National Elder Law Month! While the observance isn’t typically met with a great deal of fanfare (alas, there are no greeting cards for this occasion at Target), it’s a good reminder for all of us to stop and think about what kind of care we’d like in our later...

Why Every Business Owner Should Have an Estate Plan

Why Every Business Owner Should Have an Estate Plan

We plan for everything in business— new product launches, the perfect marketing strategy, the impact of upcoming trends on your business goals, and how many coffees we’ll need to power through afternoon meetings.  But one area often flies under the radar: estate...

Join the conversation

0 Comments

Submit a Comment