Gary Altman, on his firm’s blog reports that in view of the Clark, inherited IRA decision, clients must thoughtfully reconsider any outright beneficiary designations for their retirement accounts if they want to insure that the funds will remain protected for their beneficiaries after death.  By far the best option for protecting an inherited IRA is to create a Standalone Retirement Trust for the benefit of all of the intended IRA beneficiaries.  If properly drafted, this type of trust offers the following advantages:

  • Protects the inherited IRA from each beneficiary’s creditors as well as predators and lawsuits
  • Insures that the inherited IRA remains in the family bloodlines and out of the hands of a beneficiary’s spouse, or soon-to-be ex-spouse
  • Allows for experienced investment management and oversight of the IRA assets by a professional trustee
  • Prevents the beneficiary from gambling away the inherited IRA or blowing it all on exotic vacations, expensive jewelry, designer shoes and fast cars
  • Enables proper planning for a special needs beneficiary
  • Permits minor beneficiaries, such as grandchildren, to be immediate beneficiaries of the inherited IRA without the need for a court-supervised guardianship
  • Facilitates generation-skipping transfer tax planning to insure that estate taxes are minimized or even eliminated at each generation

via How to Protect Inherited IRAs After the Clark v. Rameker Decision | Altman & Associates – Estate, Legacy and Business Planning.

Posted by Lewis J. Saret, Co-General Editor, Wealth Strategies Journal.