An individual retirement account, or IRA, is a way to claim tax advantages for your retirement savings. Like life insurance, your IRA may have a designated beneficiary who receives the remaining funds in the account after your death. Sometimes individuals wish to assert more control over their IRA distributions, and prefer to leave the IRA in a trust rather than name a specific beneficiary. This is relatively simple to do, especially with the aid of an attorney.
1. Create a valid trust that is irrevocable at death. State laws pertaining to trust creation vary, and a trust document is a very complex legal construction. Hire an attorney to help you create a trust if you do not already have one. You can include an IRA in an existing trust without recreating the trust.
2. Name the trust as the designated beneficiary for your IRA. The process will vary depending on the company that holds your IRA, but naming a trust as your beneficiary is the same as naming an individual.
3. Ensure that the trust provides specific instructions for the trust's beneficiary. If you simply want your IRA to be additional funds that go to your already named beneficiaries, you will not need to modify the trust. If, however, you wish to add contingencies specific to the IRA funds, you will have a draft an amendment to your trust including this contingencies.
4. Provide a copy of the trust document to the company that holds the IRA within one year of the trustor's death. This is an IRS requirement that is independent of any agreement you have with your IRA holder.
- While trusts are powerful legal documents that allow you to retain great control over your wealth after your death, they are complex and susceptible to error. Rely on the aid of an experienced estate planning attorney when crafting your trust.
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