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Protecting Your IRA From Your Kids in Virginia

Money treeWhat if you like the idea of leaving your IRA to your kids—but worry that they'll blow the tax advantages involved? Enter a tool called a trusteed IRA, a traditional individual retirement account with some of the estate-planning advantages of a trust that an increasing number of financial-services companies are aiming at aging baby boomers.

The common IRA is uncommonly powerful, but only if you know how to use it right. In fact, your IRA can actually serve estate planning purposes beyond simple retirement funding. Interested? If yes, then you need to consider a “trusteed IRA.”   A good place to start your education is a recent MarketWatch article titled “Trusteed IRAs Can Help Heirs Manage Inheritance.

Basically, IRAs are fairly tidy little retirement accounts because they can be passed on to your heirs, thereby passing on some potentially nice tax advantages and a growing account outside the probate process. When inherited, IRAs still have to comply with a host of tax rules, and an heir can either take a lump sum upfront or figure out their own Required Minimum Distribution (RMD) pattern.

On the other hand, a trusteed IRA has that “trustee” – the same role that drives the engine of a full trust agreement – to watch over matters and guide the IRA from retirement account to a guided wealth transfer tool.   The trusteed IRA is an interesting option for a healthy middle slice of Americans planning their estates. Case in point, U.S. Bank describes the tool as best suited for accounts worth at least $2 million.

Whether or not it is right for you is another question. What is it you have to leave in terms of IRAs? Have you considered how and why you want to leave it to loved ones, even those who may not be as financially mature as you would like? How will you protect heirs from their own bad choices?  Fortunately, there are many ways to accomplish your goals. If a trusteed IRA is not the ticket for you, then there are other alternatives to evaluate, like the stand-alone IRA trust.

You can learn more about this topic as well as other strategies on our website under the tab entitled: estate planning in Virginia. Be sure you also sign up for our complimentary e-newsletter so that you may be informed of all the latest issues that could affect you, your loved ones and your estate planning

Reference: The Wall Street Journal (December 15, 2013) “Trusteed IRAs Can Help Heirs Manage Inheritance

 

 

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Update to our Process

The unprecedented coronavirus pandemic has taken our entire country by surprise. We understand how difficult this time is for America’s businesses and families.  However, we believe it is vitally important that we make every effort possible to continue to offer solutions that avoid disrupting our important partnership with you, your family and friends.  As you know, estate planning is not something that should wait for a more convenient time, therefore the opportunity to address your important goals both during and after this crisis should not wait.  To that end, we have added the option of a ‘virtual consultation’ to our office process.  You will now have a choice of either meeting with us in our office or in the comfort of your own home.