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FAQs – STANDALONE RETIREMENT TRUST MYTHS AND FAQS

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• Myth: Individual Retirement Accounts (IRAs) are exempt assets in bankruptcy.

Fact: According to the Bankruptcy Code, only a certain amount of your IRA is exempt from a bankruptcy proceeding, not the entire amount.  If you have a large sum of money, some of it may still be taken. If you have inherited an IRA, Clark v. Rameker states that your inherited IRA is not protected in bankruptcy.

• Myth: My retirement plan is through my employer and is protected by ERISA (Employee Retirement Income Security Act).

Fact: Just because your retirement funds are held in an account by your employer does not automatically mean that the plan is an ERISA-covered plan account.  For example, IRA-based plans like SEP and SIMPLE IRAs do not receive ERISA protection.

Frequently Asked Questions

What is an SRT?

A standalone retirement trust, “SRT” for short, is a trust used to provide asset protection and maximized tax-deferred growth for spouses, children, and other loved ones. This means more assets go to the people you care about.

Why would my loved ones need asset protection?

Lawsuits are filed every few seconds all year long, every year, in the United States. We all have a bullseye on our back. Commonly, lawsuits stem from car accidents, business failure, divorce, malpractice, tenants, slip-and-falls, bankruptcy, and the like. Without your protection, inherited assets can be seized for any number of reasons.

What if I end up using up my retirement account during my lifetime?

By all means, use your retirement funds as you think best. Even after you set up an SRT, you’ll have full control and the right to enjoy your retirement funds for years. The SRT is named as the beneficiary of your retirement account and therefore, will only receive funds once you have died, leaving you free to spend the money as you see fit.  However, if you’re like most people, you will still have assets in your retirement account when you die; that’s when the SRT will protect your loved ones and their inheritance.[/vc_column_text][vc_column_text]

Trust attorney Schoemakers to help you determine the best way to manage your estate. Call now to schedule an appointment with an estate planning lawyer in Clear Lake, Texas.

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