When you are making an estate plan, it’s a good idea to update the beneficiaries for all of your accounts. If you are creating a trust, you might be wondering if you can make it your retirement account beneficiary. This is actually an option, but there are some pros and cons to this arrangement that you should know about before you assign any beneficiaries. A Woodland Hills trust attorney from our firm can advise you on what to do.
Why Make a Trust a Retirement Account Beneficiary?
When you make a trust a retirement account beneficiary, you are making it a bit easier for the assets from this account to pass to someone else. You do not have to worry about the probate process and the time and money spent to go through that. This arrangement should also minimize the chance of any potential conflict breaking out over the assets in that account.
This is a great way to leave assets for a minor child or a loved one with special needs. You can assign a trustee to help manage these assets and ensure that they do not run out. Then your loved one can use the funds to pay for various expenses. Depending on how the trust is set up, you can also make sure that these assets do not prevent your beneficiary from seeking out government benefits they may rely on, like Medicaid or SSI.
What Issues Could I Face If a Trust is a Retirement Account Beneficiary?
There are some limitations to this kind of arrangement though. When you make a trust a retirement account beneficiary, you have to think about the minimum distribution payments, the money that must be withdrawn from a retirement account each year to avoid tax penalties. Rules passed in the SECURE Act of 2019 can also limit how long some beneficiaries can keep assets in a retirement account. It’s good to learn about how these rules could affect your loved ones before you commit to making your trust a beneficiary.
Do I Need a Lawyer to Choose a Beneficiary?
Most accounts allow you to choose beneficiaries without the help of a lawyer. You should come to us if you want to set up a trust though. We can help you figure out what kind of trust is right for you and then we can make sure that this trust is funded. It’s possible to make small mistakes that result in big headaches when you try and make an estate plan on your own, so why not leave the job to our seasoned professionals?
Contact Our Law Firm Today
You don’t have to make your whole estate plan on your own. Contact the Law Offices of Yacoba Ann Feldman and schedule a consultation with our experienced attorneys. No matter how complex or simple you think your estate is, we can help you make a plan that protects your assets and leaves something behind for your loved ones.
