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Estate Planning & Retirement Planning

Retirement Estate Planning

Retirement planning and estate planning are essential to ensure the protection of your assets for your loved ones.  A Revocable Living Trust or otherwise known as a “Living Trust” is the main vehicle for transferring your assets at death to your loved ones.  The type of assets that you can transfer to your Living Trust include homes, vehicles, personal property, bank accounts, and other financial instruments.

However, the Living Trust should not be named a beneficiary for your 401(k), IRA and other retirement plans, because of unwarranted IRS tax implications for your heirs.  There is often a gap in many people’s estate planning strategy related to their retirement assets, such as 401(k), IRA’s and other retirement plans.  One option is to rollover the retirement accounts to your spouse, who in turn can roll over to younger heirs upon his or her death.

Retirement Trust Lawyers

A better strategy is the use of a Retirement Plan Trust, otherwise known as an “IRA Inheritance Trust”.  A Retirement Plan Trust is an excellent vehicle to be named as the beneficiary of your retirement assets such as a 401(k), IRA, or other retirement plans.

The planning benefits of the Retirement Plan Trust are the following:

  • Benefit of maximizing your beneficiary’s tax deferral of their inherited retirement accounts;
  • Asset Protection for your heirs provided by the spendthrift provision, whereas retirement assets are protected against creditor claims, unlike inherited retirement assets.
  • Ability to automatically create a Special Needs Trust in case of a major disability of your beneficiary or beneficiaries to protect the inheritance from government creditors;
  • The inheritance is untouchable by divorced spouses.

In addition, today, parents and grandparents want their children and grandchildren to be protected in case of a divorce.  Under current case law, inherited retirement accounts do not offer the same asset protection benefits as qualified retirement accounts.  A qualified retirement account is the status given to retirement accounts for certain retirement assets when created by a person such as a 401(k) or individual retirement account (IRA).  When a person dies, the person that inherits the asset loses the qualified status of the retirement account when they inherit in their individual name.

Also, if a person files for bankruptcy protection, they will likely not be able to claim the inherited IRA or 401(k) as an exempt asset in Bankruptcy Court. Existing case law has denied that inherited assets maintain the same status as original retirement assets set up by a person.

The solution to this problem is the Retirement Plan Trust, otherwise known as an IRA Inheritance Trust.


Sean Robertson and Gateville Law Firm are experienced estate planning and retirement plan estate planning attorneys.  Sean Robertson is a graduate of DePaul University College of Law and the University of Illinois at Urbana-Champaign.  Sean Robertson is the Principal of Gateville Law Firm where he concentrates his practice in the areas of estate planning, family and divorce law, real estate, and corporate law for family-owned business owners and high-net-worth individuals and families.

Setting up a free initial consultation with a qualified estate planning attorney can provide a legacy for your family for generations.  Sean Robertson and Gateville Law Firm may be reached at 630-780-1034 or via the online contact form.

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