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 heirs could be left penniless.
Fortunately, there is a solution to this problem. A special trust called a “Standalone Retirement Trust” (SRT) can protect inherited retirement accounts from your beneficiaries’ creditors.
When your spouse, child, or other loved one inherits your retirement account, their creditors have the power to seize it and take it as their own.
If you’re like most people, you’re thinking of protecting your retirement account so your family can benefit – rather than the creditors. Here are 5 reasons to protect your retirement account:
- You have substantial combined retirement plans. Spouses can use an SRT to shield one or the other from creditors.
- You believe your beneficiary may be “less than frugal” with the funds. Anyone concerned about how their beneficiary will spend the inheritance should absolutely consider an SRT as you can provide oversight and instruction on how much they receive – and when.
- You are concerned about lawsuits, divorce, or other possible legal actions. If your beneficiary is part of a lawsuit, is about to divorce, file for bankruptcy, or is involved in any type of legal action, an SRT can protect the inherited retirement accounts from those creditors.
- You have beneficiaries who receive assistance. If one of your beneficiaries receives, or may qualify for, a need-based governmental assistance program, it’s important to know that inheriting from an IRA may cause them to lose those benefits. An SRT can be drafted to avoid disqualification.
- You are remarried with children from a previous marriage. If you are remarried and have children from a previous marriage, your spouse could intentionally (or even unintentionally) disinherit your children. You can avoid this by naming the spouse as a lifetime beneficiary of the trust and then having the remainder pass onto your children from a previous marriage after your spouse’s death.
You’ve Worked Hard To Protect & Grow Your Wealth – Let’s Keep It That Way
You worked hard to save the money in those retirement accounts and your beneficiaries’ creditors shouldn’t be able take it from them. Give us a call and let us show you how an SRT can help you protect your assets as well as provide tax deferred growth.
Subscribe to Barbara M. Pizzolato, P.A. blog posts
To the general public, a trust may seem like an advanced tool only for the wealthiest among us. But, the reality is that trusts are a foundational estate planning tool with a solid history for being highly effective in ensuring a person’s wishes are carried out. The...
If you find yourself caring for both your children and your parents, simultaneously, you should know whether your parents have put together an estate plan. While it is still your parents’ choice to make their estate-planning decisions, having a plan – no matter how late in life it is created – is an absolute must.
When you think of IRAs, you probably think of retirement. But But what happens to your IRA money after you’re gone? The answer depends on how you go about creating your estate plan and selecting beneficiaries, and you might be surprised to find out that your money...
The business planning process involves taking steps to set forth your goals for your organization and your path towards achieving those goals. While the specifics of the business plan will be different for every business since there are no two companies that are the...
There are many different benefits of incorporating, which is why so many companies in Florida and throughout the United States operate as corporations. If you are thinking about forming a corporation or are trying to decide which business structure makes sense for...
If you are starting or investing in a business, you must understand buy-sell agreements and you should strongly consider creating such an agreement for your organization. A buy-sell agreement can protect your investment and can help to ensure your company is able to...
Fort Myers (Main Office):
12751 New Brittany Blvd.
Fort Myers, FL 33907
F: (239) 221-0279
By Appointment only
4851 Tamiami Trail North
Naples, FL 34103
F: (239) 221-0279
New York Office:
Suite 240, One Suffolk Square
1601 Veterans Memorial Hwy
Islandia, NY 11749
F: (239) 221-0279
Proudly Serving Communities across Lee County, Collier County, Charlotte County & Southwest Florida
The information on this Law Firm website is for general information purposes only. Nothing on this or associated pages, documents, comments, answers, emails, or other communications should be taken as legal advice for any individual case or situation. This information on this website is not intended to create, and receipt or viewing of this information does not constitute, an attorney-client relationship.