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Warning: Don’t Let Creditors Inherit from Your IRA

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.

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Warning: Don’t Let Creditors Inherit from Your IRA

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: Cash out the...

read more

5 Reasons to Protect Your Retirement Accounts Now

During your lifetime, your retirement account has good asset protection, but as soon as you pass that account to a loved one, that protection evaporates. This means one lawsuit, including a divorce, and POOF! Your life long, hard earned savings could be gone. Your...

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Your Fall “Legal Affairs” Checklist

 When the leaves change, it’s an excellent time to review your affairs. Below is a checklist to ensure your planning meets your needs and is up-to-date:  When was your power of attorney last updated? A power of attorney is a valuable legal document, no matter what the...

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Why receiving an inheritance changes your estate plan

Receiving an inheritance is a huge blessing but, if not handled properly, can also become a curse. Often times, the inheritor does not know what to do with the new asset and runs into financial trouble, squandering most, if not all of it. This could happen due to the...

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What Estate Planning Awareness Means For You

The third week of October is National Estate Planning Awareness Week (Oct. 15-21, 2018). Estate planning is important for everyone regardless of wealth or family status because if you become incapacity or pass away without an estate plan, you are leaving the...

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