Should a Trust be Named as Beneficiary of an IRA?

Should a trust be named as beneficiary of an IRA?

In this episode, Chris Berry answers the question: Should a trust be named as beneficiary of an IRA?



Estate Attorney and Advisor Chris Berry of Castle Wealth Group answers questions on retirement and estate planning every Wednesday at 1pm. Register via this link or give our office a call at 844-885-4200.

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Episode Transcript

Should a trust be named as a beneficiary of an ira welcome to Berry’s Bites. Please join our host attorney and financial advisor Chris Berry.

So we have a trust right? And there’s two ways that a trust can control property one is it can be the owner or the trust can be a beneficiary. Now as I said before with any qualified accounts that’s an IRA that’s a Roth that’s a 401k that’s a 403b. If it’s yours you’re the one that earned it it has to be in your name qualified accounts to have to be in your name. If it’s an inherited IRA they named a trust of the beneficiary. The trust can be a beneficiary of that account. So the way that typically we set it up is that if you have a 401k IRA you’re the owner of it you have to be the owner of it and then typically we’ll name the spouse as a beneficiary and then we’ll name the trust is the contingent beneficiary so more times than not with any type of qualified account this is a Roth this is a 403b. This is a traditional ira any type of qualified account primary beneficiary is almost always the spouse because the spouse can do what’s called a spousal rollover and the contingent beneficiary for setting up a trust almost always is a trust so again the trust cannot be the owner of your IRA, now that said and this has been the drum that we’ve been beating since the tax cuts and jobs act expired is that we should be looking at from a tax perspective even if we don’t have a trust pulling money out of those traditional 401k’s. IRAs paying the tax and then now we can invest it now the trust could be the owner so especially if we set up a Castle Trust it makes sense for two reasons one from a tax perspective we’re going to pay less tax over time because taxes are lower right now than they’re going to be in the future and then the second piece of it is that if it is in that asset protection trust now we have that asset protection so almost always if you’re going to keep it as an ira or a Roth and that’s a different discussion but if you are you’re going to be the owner primary beneficiary will be spouse contingent beneficiary will be the trust. Thank you

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