Are you among the growing thousands of Americans leveraging the power of an IRA to save for the future? The last ten years have seen a tremendous increase in both the number of Americans starting IRAs and the amount of money invested in traditional and Roth IRAs on the whole–some $6.5 trillion!
This is undeniably good news as many financial planners consider IRAs to be perhaps the perfect balance of risk and reward for those looking toward retirement. However, the increasing prevalence of IRA use has had some unintended consequences when it comes to estate planning. Recent studies have shown just how little IRAs are taken into account during estate planning, with only a small portion of these assets to ever reach future generations.
You want to make sure that your descendants are provided for after you are gone, so make sure you take the time to ask an estate planning attorney about establishing a trusteed IRA.
A trusteed IRA combines the financial strength of a traditional IRA with many of the same estate planning protections offered by a trust. Moreover, their design can be such that the assets can provide for the long-term, reaching down through multiple generations of beneficiaries. Despite requiring a greater initial expense to administer than a traditional IRA, a trusteed IRA is typically less costly than a non-IRA trust and offers near-limitless options for it to be tailored to your individual wishes.
A trusteed IRA affords you the same control as a standard trust, ensuring that your primary beneficiaries are not simply handed a lump sum of cash to do with what they wish. Instead, you can direct the distributions to grandchildren and great grandchildren, or even impose conditions on the availability of portions of the assets.
Research into the fate of traditional IRAs show that the majority of primary beneficiaries will deplete the account entirely within just two years. This often takes the form of melding the IRA assets into their own, but can entirely wasted by a particularly spendthrift inheritor. A trusteed IRA lets you set the boundaries. One popular example: allow no more than the IRS’s minimum required distribution to pass to your heirs each year to see your investment over many generations–even accruing interest along the way!
This tool can be invaluable for a blended family. Your children and your children’s children are those you seek to provide for, not any new family of your surviving spouse. The trusteed IRA again proves its value in the unfortunate event that you become incapacitated–the trustee assumes control over the investments and distribution on your behalf, with no need of appointing a guardian in the interim.
If you would like to learn more about the benefits of a trusteed IRA, call our office today at 612-206-3701 or reach out via our online contact form to schedule a time for us to sit down and talk about a Family Wealth Planning Session, where we can identify the best strategies for you and your family to ensure your legacy of love and financial security.
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