Estate planning is an incredibly complex matter with several important considerations that must be made to ensure your assets and loved ones are protected upon your passing. For example, you’ll need to determine which documents and tools you should utilize, like wills and trust funds. One thing you may not have considered during this process is the ability to name a trust as the beneficiary of your retirement account. If you’re interested in learning more about this option, you’ll want to keep reading. You’ll discover how Pennsylvania estate planning attorneys can assist you throughout this process.
Is it possible to name a trust as a beneficiary of a retirement account?
When you have a retirement account, it can help provide peace of mind that you and your loved ones will be taken care of when you retire. However, it’s important to understand that you should name beneficiaries to inherit the account upon your passing. It’s important to understand, however, that naming a beneficiary can be a complicated process due to tax considerations.
It is important to understand that you are eligible to name a trust as the primary beneficiary of your retirement account. Upon your passing, the trust will inherit the account and will be maintained as an asset.
What are the benefits and disadvantages of this option?
Like anything, there are benefits and drawbacks to naming a trust as the beneficiary of a retirement account. Generally, this is ideal if you have beneficiaries who cannot manage large sums of money on their own, like minors or those with disabilities. Additionally, depending on the kind of trust you establish, you’ll find that you can help avoid estate tax issues, as your retirement account will not automatically become a part of your surviving spouse’s estate.
However, the disadvantages of naming a trust should be weighed carefully. One downside to this option is the minimum distribution payments if you have multiple beneficiaries listed for your retirement account. Additionally, for accounts inherited after 2020, the majority of non-spousal beneficiaries must take full distribution of the amount held by the tenth year following the account owner’s death.
As you can see, there are several issues you can face when trying to name a trust fund as a beneficiary. It’s imperative to understand the importance of connecting with an experienced attorney who can help you through these complex matters. Working with an attorney gives you the opportunity to ensure that naming a trust as the beneficiary of your retirement is in your best interest, and assisting you in the process of establishing this matter. At Friedman Schuman Layser , our dedicated legal team will do everything in our power to help you achieve peace of mind. Connect with us today to learn how we can assist you through these matters.
