Shocking to most people, the retirement account you leave for your spouse can be seized in a divorce, lawsuit, or bankruptcy.
3 Options Available To Surviving Spouses
When your surviving spouse inherits your IRA, he or she generally has three options:
- Cash out the inherited IRA and pay the income tax.
WARNING! The cashed-out IRA will not have creditor protection and accelerates taxation.
- Maintain the IRA as an inherited IRA.
WARNING! The inherited IRA will not have creditor protection.
- Roll over the inherited IRA and treat it as his or her own.
WARNING! This may offer some creditor protection; however, not in all cases.
It’s frustrating to many that a stranger can swoop in and take their hard-earned money; fortunately, there’s a solution and that solution is a retirement trust.
Standalone Retirement Trusts Provide Protection
A Standalone Retirement Trust (SRT) is a special type of trust designed to be the beneficiary of your retirement accounts after you die. It can protect your assets from your beneficiary’s creditors. In fact, we can include trust provisions which specifically benefit your spouse in situations such as:
- Second marriages
- Divorce
- Lawsuits from car accidents, malpractice, or tenants
- Business failure
- Bankruptcy
- Medicaid qualification
Want To Know More?
The bottom line is that a properly drafted SRT is often your best option for protecting your retirement assets (and providing the bonus of tax-deferred growth). Want to know more? Contact us today to schedule a conversation. We look forward to working with you. Our office is located at 17625 El Camino Real, Suite 102 Houston, TX 77058
Gratia specializes in providing comprehensive solutions in Estate Planning, Probate, Family Law, and Business Formation. Whether guiding families through the intricacies of estate planning, navigating the probate process, or advising on business and family law matters, Gratia ensures every client feels respected, informed, and confident. Her approach is characterized by clear communication and tailored strategies that reflect the specific needs and values of her clients.
Gratia is deeply embedded in the local area, often participating in community outreach and educational programs. She offers both virtual and in-person consultations to meet the diverse needs of her clients.
