Charleston Estate & Trust Attorneys
Estate Planning Services for Clients Throughout Charleston
Planning for Retirement and Inheritance of Retirement Funds
Various Ways of Accessing IRA Funds
There are several ways to withdraw money from an inherited IRA, including:
Withdrawing the whole amount at once as soon as possible
Withdrawing all the money within 5 years after your benefactor’s death
Withdrawing the money incrementally over your expected lifespan
Withdrawing the money more slowly has two advantages: you will pay less tax every year and you will have more time for tax-deferred growth of your assets. For this reason, many retirement attorneys advise that you use the third method.
Wiles Attorneys Have a Fresh Idea: the Stand-Alone Retirement Trust
At Wiles Law, we often recommend an alternative to IRAs and 401(k)s — the Stand-Alone Retirement Trust (SRT). As you may already be aware, trusts are frequently used as cost-effective tools in planning for retirement. The SRT is a special type of revocable living trust. The advantage of an SRT is that it is carefully crafted to protect your retirement account for the benefit of your loved ones until after you pass away. Creating an SRT also allows you to establish
The Big Question About SRTs — and the Big Answer
You may ask how it is possible to put your retirement accounts into a trust while you are alive, wondering: Isn’t this illegal? The answer is that although it is illegal to put your retirement accounts into a trust during your lifetime, there is a legal loophole that can greatly benefit your loved ones. You can simply name a trust as the beneficiary of the SRT. By taking this action you can protect your retirement assets from taxation, while also controlling their distribution after your death. It should be noted that an SRT can be designated as either a primary or a secondary beneficiary.
Why You Need Wiles Law to Set Up a Workable SRT in Charleston
Setting up an SRT, or
Mistakes Can Be Costly
If the trust agreement is flawed, for example, your beneficiaries may have to withdraw the whole account balance within 5 years of your death. It is also possible that an improperly crafted SRT may result in income tax problems for some or all of your beneficiaries. Problems may also arise after you die when your living trust must be divided into shares. It may be unclear whether the separate account rule remains available to each inheriting party. With the assistance of Wiles Law’s astute trust attorneys, you will be guided to name each of your heirs as a separate beneficiary or to create a separate trust for each one. Otherwise, you risk your personal priorities being overridden by laws you were not aware of.
Wiles Law Is Here to Help
Whether you are leaving the totality of your retirement funds to heirs, or are leaving some money to charities, our experienced trust attorneys will draft your SRT to your specifications and correctly establish designated shares on the retirement account beneficiary form (rather than in the SRT agreement) to ensure that the trust performs exactly as it’s supposed to. If you live in Charleston and are looking to establish or improve your estate plan by adding a stand-alone retirement trust, we are fully prepared to protect you and your loved ones.