Should I Name a Trust as a Retirement Account Beneficiary?

When designating retirement account beneficiaries, it is important to think about your individual estate planning goals. There are disadvantages and advantages to naming a trust as a beneficiary of a retirement account. You can avoid probate, expenses and frustration when naming beneficiaries for qualified retirement plans as these assets pass outside of your probate estate.

Naming a trust as a beneficiary of your retirement plan is most helpful if your beneficiaries cannot be trusted with a significant amount of money, currently have a disability for which they receive government benefits or if those beneficiaries are minors. However, the major disadvantage of naming a trust as a beneficiary is that the assets inside the retirement plan are subject to required minimum distribution payouts based entirely on the oldest beneficiary’s life expectancy. This is not as important if you only have one beneficiary on the trust but if there are multiple heirs with various ages, this can cause significant problems.

Naming individual beneficiaries, however, will allow each of those beneficiaries to take a required minimum distribution based on their individual life expectancy. For more information about estate planning for your IRA and other retirement accounts, set aside a time to speak with an experienced estate planning lawyer in NH.

Learn more about how to create and use trusts within your estate plan by setting up an initial consultation with our law office. We’ll learn more about you, your family, and any other special interests like a business. We’ll use that information to create a comprehensive estate plan for you.