3 Ways an Attorney Can Help You Put Your IRA in a Trust

Tax law is complicated and technical, just like any other expert field of knowledge. As you’re reading through different options as you plan your estate, you’re going to come across a lot of simplified information, especially online. Even worse, you’re going to come across information that is oversimplified.

If you’ve come across several mentions of the benefits of putting your IRA in a trust, that information isn’t necessarily wrong. There are a lot of reasons to consider a trust and a lot of reasons why you want to plan your estate’s details ahead of time. But talk to an attorney before putting pen to paper. Here are three reasons why:

1. You may not want to transfer over your IRA while you’re still alive.

While you can technically shift the funds in your IRA over to a recipient or a beneficiary, you lose a lot of the tax advantages you’ve worked hard for. Once money in a traditional IRA leaves that IRA, it’s subject to income taxes. An experienced attorney can help you make the right future plans based on what you actually want to have happen.

2. Your beneficiaries need the right look-through trust provisions. 

If your beneficiaries receive the funds in your IRA in the form of a basic windfall, they have to pay all of the applicable taxes. That can turn the gift you meant to help them with turn into a financial headache. But an attorney can help you set up the IRA in a future trust that requires minimum distributions. This keeps the money in an IRA for longer so your beneficiaries can let the money grow and pass from generation to generation.

3. A lawyer can make things clear and inarguable in your will.

Even if you have a serious conversation with your family about your intentions and your estate, things can get lost in translation. Some of your beneficiaries may also fall afoul of the same technical tax rules you want to protect them from. An attorney can help you create a legally binding will that creates a lot less confusion and heartache for your family.

Contact us at Ford + Bergner LLP to get started.