5 Things to Think About When Setting Up a Stand Alone Retirement Trust for a New Client

Feb 23, 2017 12:00:05 PM

Wealth Docx can give you – and your client – peace of mind when establishing complicated retirement trusts.With the exception of a spouse, beneficiaries of an IRA don’t have a lot of options when they inherit. Choices consist of receiving the funds in a lump sum or liquidation of the account over five years. That also means a spendthrift beneficiary can waste a parent’s hard-earned retirement income with disturbing ease. Setting up a stand-alone retirement account not only offers additional opportunities for inherited retirement funds, but it can also protect those assets from a beneficiary’s worst impulses. A stand-alone trust also shields assets from a beneficiary’s creditors and/or lawsuits, which isn’t the case with an inherited IRA. When you’re setting up a stand-alone retirement account for a new client, take these issues into consideration:

  1. The correct language – federal requirements for naming a trust as the beneficiary of a retirement account are quite exacting. You want to ensure that when your client dies, the stand-alone trust is properly drafted and holds up to IRS scrutiny.
  2. Spousal benefits – while spousal IRA inheritance rules differ from those of other beneficiaries, that doesn’t mean your client may not want to include a spouse in the stand-alone trust. Surviving spouses may remarry, and the client’s IRA funds could end up going eventually to a new spouse or the new spouse’s children. A stand-alone retirement trust makes sure money stays in the client’s family.
  3. IRA beneficiaries match up – the client may believe that his or her various retirement accounts all have the same beneficiary. If your client has multiple accounts, it’s quite possible that the beneficiaries don’t all match. An error like this can upend the stand-alone retirement trust.
  4. Conduit or accumulation – which form of distribution best suits your client’s needs? Take into consideration the beneficiary’s temperament – as per your client – and whether your client has particular goals for beneficiaries, such as paying for education or a home down payment. It’s also crucial to keep creditor protection in mind, and accumulation is generally the best bet in that regard.
  5. Special needs beneficiaries – if the client has a special needs beneficiary, a stand-alone retirement trust can provide for them without jeopardizing government benefits, but it adds complication.

In short, the creation of a stand-alone retirement trust has more than its share of pitfalls. State-of-the-art attorney software ensures your client’s trust won’t fall into one of them.

Wealth Docx® Stand-Alone Retirement Trust

The right software can ensure that a stand-alone retirement trust achieves all of the objectives desired by your client. That’s why Wealth Docx includes a complete retirement planning system, enabling you to easily create a stand-alone retirement trust with ancillary estate planning documents, including funding instructions and forms and certificates of trust. Call us today or visit us online to learn more about how Wealth Docx can give you – and your client – peace of mind when establishing complicated retirement trusts.

Win-Win Adding Retirement to Estate Planning

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