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IRA Trusts

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Individual Retirement Accounts, commonly known as IRAs, were originally established under the Employee Retirement Income Security Act, or ERISA, in 1974. They were designed to help workers save for their own retirement when they could not afford, or were not offered, retirement plans by their employers. IRAs provide a means for individuals to take advantage of tax-deferred retirement savings even when they do not come under the umbrella of a 401(k) or other employer-sponsored retirement plan. They are also used when an employee leaves a company, either voluntarily or through a termination or lay-off, in order to transfer accumulated retirement assets in what is known as an IRA rollover. 

The Purposes of Creating an IRA Trust

IRA trusts are used to protect the funds in the IRA when the individual with the retirement account passes away. It is important to note that an IRA cannot be put in a trust during one’s lifetime. The IRA trust is created to protect the beneficiary at the time of inheritance. 

During your lifetime, your IRA exists as a prepared cushion for your retirement. You name a beneficiary of its funds in case you die before using all of the account for your retirement needs. You should be aware that naming a beneficiary of your IRA legally supersedes even a specific statement in your will to the contrary. Whether your retirement account is a Roth, SEP or SIMPLE IRA, the person you name as beneficiary on the IRA itself will inherit its contents. 
If no IRA trust is created, the beneficiary of your IRA may use the funds as he or she desires, as long as IRS requirements are met. There are situations, however, in which you don’t want the beneficiary to have control of the IRA account for his or her own protection. This is when it’s time to consider creating an IRA Trust.

Matters connected with IRA trusts are complicated, not only in South Carolina, but throughout the country, which is why it is essential to have a highly skilled wills and trusts attorney at your side if you are considering creating one. Wiles Law Firm, LLC has successfully served hundreds of clients during the past decade. Our practice has a well-earned reputation for working with efficiency and integrity to protect our clients and preserve their financial health.

Reasons You May Want to Create an IRA Trust

There are a number of circumstances in which it may not be wise to leave your IRA unprotected. Perhaps the person you have named as beneficiary is, through reasons of mental incompetence or impulsivity, a poor money manager. In such a case, creating an IRA trust is a way of controlling the distribution of your IRA funds after you die. When, with the guidance of one of our capable wills and trusts attorneys, you create an IRA trust, you name a dependable trustee to control the distribution of your IRA funds after you’re gone. The trustee will be tasked with allocating portions of the money to the beneficiary in a reasonable way, protecting that person from overspending or mismanaging the funds. The IRA trust also prevents the designated money from being taken by the beneficiary’s creditors, which makes it very helpful if your beneficiary is known to accumulate debt.

Advantages of Creating an IRA Trust

There are a number of benefits to creating an IRA trust. In addition to protecting the money in your IRA from being frittered away with reckless spending or consumed by creditors, the IRA trust has the advantage of being a revocable trust. As the name indicates, a revocable trust is one you can alter during your lifetime if circumstances change. An IRA trust also has the flexibility to allow you (the trustor) to establish sub-trusts within the original trust, though these must be very carefully constructed by one of our well-schooled wills and trusts attorneys. 

Types of IRA Trusts

In order to know whether creating an IRA trust will be of benefit in your particular financial situation, our attorneys will take the time to listen carefully to your needs and goals. At Wiles Law Firm, LLC you are always our first priority. If in consultation we decide that an IRA trust will be beneficial, it will be crafted in terms dictated by the way you want your IRA funds disbursed. The two types of IRA trusts are: [1] accumulation trusts, in which the trustee disburses funds to the beneficiary at his or her own discretion and [2] conduit trusts, in which minimum distributions are paid to the beneficiary as the trust receives payments. In neither case is the beneficiary allowed to withdraw funds at will, nor are the beneficiary’s creditors able to tap into the funds for payment of the beneficiary’s debts.

Wiles Law Firm, LLC Is Here to Help You Make Responsible Decisions

Like all tools for estate planning, IRA trusts are not appropriate for every client. It takes a well-informed professional like Tripp Wiles to assist you in preparing for your future and the future of your family in ways advantageous to all. For outstanding service and personal attention call us or fill out one of the contact forms on our website.


Wiles Law Firm, LLC helps clients with their estate planning needs in Charleston, South Carolina and the surrounding areas such as West Ashley, Summerville, North Charleston, Mount Pleasant, and John's Island.

Information on this website is not legal advice. Further, viewing of the enclosed information does not create an attorney-client relationship with Wiles Law Firm, LLC. Matters will be handled by attorneys who primarily practice out of our office in Charleston County located at 852 Lowcountry Blvd., Ste. 101, Mt. Pleasant, SC 29464. M. Emerson Wiles, III is the attorney responsible for this advertisement.

Any result Wiles Law Firm, LLC may achieve on behalf of one client in one particular matter does not necessarily indicate similar results can be obtained for other clients. Please contact a South Carolina estate planning attorney or one of our attorneys with Wiles Law Firm, LLC for a consultation regarding your unique estate plan.



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| Phone: 843-718-0232

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