Talking to Your Clients about Stand-Alone Retirement Trusts

Sep 19, 2017 10:54:56 AM

Learn more about how an SRT can protect beneficiaries' futures–from financial to personal.

For many clients, their retirement accounts emerge as a major part of their estates. But what if there are concerns about how to best protect a naming beneficiary as the direct inheritor of an IRA? 

For example, as discussed in Forbes, a 2014 Supreme Court decision found that directly-inherited IRAs could not be shielded from creditors during a bankruptcy. But such efforts might be mitigated by the creation of a Stand-Alone Retirement Trust (SRT). Client conversations regarding stand-alone retirement trusts revolve around asking the right questions. SRT can have important tax implications, though, so it's essential to find out about the family's overall financial situation to know how you can make the strongest impact. And what about the beneficiaries' own retirement accounts and trusts? Discover how an SRT might impact those, as well.

But there are other, more personal, reasons why to create a SRT that go beyond taxes.

SRT could stand for “Spendthrift Retirement Trust,” as it protects the profligate from squandering your client’s hard-earned money. Ask a client if she has concerns about her beneficiaries’ ability to handle money or her offspring’s marital situation.

If you know about any particularly sensitive family issues, such as a family member's gambling problem or addiction, you might gently address these as reasons why an SRT makes sense.

If there are children from her previous marriage, ask the client if she wants to them to receive retirement assets after the death of the surviving spouse. Some clients may trust a surviving spouse to leave such assets to stepchildren, but, they may have no legal obligation to do. So, if there's any concern, the SRT may be a great option.

With a targeted approach to protecting an IRA, an SRT is one more important way that clients can protect beneficiaries' futures–from financial to personal.

The Wealth Docx® Solution

At WealthCounsel®, our Wealth Docx software provides you with a complete retirement package system to meet the needs of individual clients. With Wealth Docx, you have confidence in even the most technical documents, such as the SRT, and more time to spend with clients asking the types of questions that greatly affect a family’s future.

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