One of the best gifts you can give your beneficiaries is the gift of a long-term vision. To protect your grandchildren, children and spouse, consider leaving your assets to an IRA Trust. If your children have special needs or you are worried about relatives blowing through assets to their own demise, an IRA trust works well. Although you can't do much after you are deceased, give yourself peace of mind knowing you did your duty and took care of your own.
Helping loved ones avoid higher taxes
One of the prudent reasons to leave assets in an IRA trust is to spread out the distributions over your descendant's lifetime. Depending on their financial situation, they could avoid paying a higher tax rate compared to a lump sum distribution. Sometimes your heirs have no idea what kind of tax liability will incur with a windfall.
Protecting assets from creditors
Also, it's prudent to protect your assets from predators and creditors. Leaving assets outright to your beneficiaries often results in misdeeds. You don't want your son or daughter to fall victim to a predator aware of the inheritance and wealth left behind with good intentions.
Creating a financial limit for spendthrifts
If your children are bad with money, it's not wise to give them full ownership of an asset. Also, children with drug dependence issues, special needs, autism, Asperger Syndrome, often need structure and limits so they don't spend it all in an emotional moment. Oftentimes, people who are grieving blow money to show their loyalty for a loved one.
With a trust, you can dictate how the assets are managed. If your heirs are young, it's great to leave assets in an IRA trust so children don't have control of the money. Do you have children from a prior marriage? Rely on a trust designed to give income to a surviving spouse. Then, set it up so the money and assets go to your children upon a spouse's death.
For more information, talk to us about identifying a beneficiary of a trust. If you want multiple beneficiaries, the language will dictate separate individual trusts to receive the assets. At Law Offices of James C. Shields, we help our clients with bankruptcy and estate planning. For more tips on leaving your assets in an IRA trust, please contact us.