How To Make The Most of Your Clients' Retirement Account

Nov 22, 2019 10:00:00 AM


For many estate planning clients, retirement assets will be the largest asset they own at their death. Passing retirement accounts to intended beneficiaries requires special knowledge and careful planning.

While most inherited assets are not subject to an income tax to be paid by the recipient, many retirement accounts are different because they are monies that have not yet been taxed. One primary goal of an inherited retirement account, therefore, is to delay the payment of income taxes as long as legally permissible.

Passing a retirement account directly to a beneficiary—whether a spouse, child, grandchild or charity—can be as easy as filling out a beneficiary designation form. However, this method can result in unintended consequences, including the loss of both asset protection and the opportunity for continued tax-deferred growth (referred to as the “stretch”).

Designating a trust as the beneficiary of a retirement account is often a better option—but the right kind of trust with the right kind of provisions is imperative. To properly advise our clients and create the right estate planning tool(s) for their retirement account assets, practitioners need to understand the basics of retirement plans, what types of trusts can be named beneficiaries of a retirement account, and the difference between a “conduit” trust and an “accumulation” trust.


Want to read the whole thing? Download the entire article on Retirement Accounts in Estate Planning: A Primer for free.


Download the entire article to learn more about:

  • The different rules and regulations for each “type” of beneficiary
  • When to designate a trust as a beneficiary
  • The differences between Conduit Trusts and Accumulation Trusts




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