Estate PlanninG

5 Reasons to Create a Standalone Retirement Trust (SRT)

Your retirement account protects your assets during your lifetime. But as soon as that account gets passed to a loved one, that protection is gone. When your spouse, child, or other loved one inherits this retirement account, their creditors can seize it and use the funds to satisfy their claims. One lawsuit could zap your life-long, hard-earned savings and leave your loved one with nothing.

Fortunately, there is a way to avoid this. A special trust called a standalone retirement trust (SRT) can protect inherited retirement accounts from your beneficiaries’ creditors.

If you or your beneficiaries fall into any of the below categories, you should probably consider using an SRT to protect your retirement accounts:

1. You have significant combined retirement plans.

2. You believe your beneficiary will be careless with the funds. If there’s any concern about how your beneficiary will spend an inheritance, you can use an SRT to provide oversight and instruction on how much they receive and when.

3. You’re concerned about lawsuits, divorce, or other possible legal actions. If your beneficiary is part of a lawsuit, is about to file for divorce or bankruptcy, or is involved in any kind of legal action, an SRT can protect the inherited retirement accounts from those creditors.

4. You have beneficiaries who receive assistance. If a beneficiary receives or may qualify for a governmental assistance program, then inheriting an individual retirement account may cause the beneficiary to lose those benefits. An SRT can help them avoid being disqualified.

5. You’re married and have children from a previous marriage. If this is your situation, naming your spouse as the primary beneficiary of your retirement account could allow your spouse to intentionally or unintentionally disinherit your children. This could happen even if you named your children as the backup beneficiaries on the account. You can avoid this by naming your spouse as the lifetime beneficiary of an SRT, and then have the remainder pass to your children from a previous marriage after your spouse’s death.

You worked hard for your wealth, and it should be protected.

We can help you set up an SRT to protect your retirement accounts. Call Santaella Legal Group, serving San Ramon, Danville, Dublin, Pleasanton & the Tri-Valley area at (925) 831-4840.