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Retirement Trusts

Retirement Trust Lawyer Serving Connecticut and New York

An IRA can be a powerful tool for retirement savings. When contemplating your estate plan, however, how can you protect the proceeds of your IRA funds from failed marriages, failed businesses or unpaid creditors? I am Richard A. Sarner of Zeldes, Needle & Cooper, P.C., and I can help you create a retirement trust plan that works for you. I can show you how to spread the distribution payments from your trust out over the life expectancy of the youngest beneficiary, thereby allowing your beneficiaries to defer income tax on the proceeds.

For more information about retirement trusts and how I can help you, contact me today to schedule an appointment with a lawyer in my offices in Stamford, Connecticut, or NYC.

Trusts That Can Compliment Your Retirement Plan: Conduit Trusts and Accumulation Trusts

An IRA can be left to one of two types of trust: a conduit trust or an accumulation trust. Of the two, a conduit trust is easier to draft and can be used whether the beneficiaries are charities or individuals. However, conduit trusts don’t offer the same level of protection from creditors as an accumulation trust.

In an accumulation trust, the trustee keeps the funds in the trust until he or she determines that it is appropriate to make a distribution. Furthermore, a third-party trust protector is given the power to restrict who can receive the property. On the other hand, minimum distributions must be taken based on the life expectancy of the oldest beneficiary, and you must take care to limit who the beneficiaries are.

In a 2005 private letter ruling, the IRS recently approved a third option for creating a retirement trust: drafting a conduit trust in such a way that it allows a trust protector to strip it of certain provisions, turning it into an accumulation trust. This strategy provides significant flexibility, guaranteeing that the trust qualifies as a designated beneficiary but still reaping the potential creditor protection benefits of an accumulation trust. If you are considering an IRA trust, this is truly the best of both worlds.

Contact me to discuss how to tailor a retirement trust to your specific needs.

Designated Beneficiaries

A crucial step in the process of creating a retirement trust is ensuring that the trust qualifies as a designated beneficiary under tax laws. Fortunately, a conduit trust automatically qualifies as a designated beneficiary under a safe harbor provision in the IRS regulations.

When creating an accumulation trust, however, you have to be more careful. To qualify as a designated beneficiary, an accumulation trust must:

  • Be valid under state law
  • Be irrevocable upon death
  • Have identifiable beneficiaries
  • Be provided to the plan administrator by October 31 following the year of death

One way to make an accumulation trust more likely to qualify as a designated beneficiary is to leave the IRA to a stand-alone accumulation trust, which becomes irrevocable at the owner’s death. Given the complex requirements that must be met to ensure that a trust qualifies as a beneficiary of an IRA, it is easier to use a stand-alone trust than to leave the IRA to an existing revocable trust, because you reduce the likelihood of errors that can cause a trust not to qualify.

Contact a Retirement Trust Attorney Today

Don’t leave the final disposition of your retirement benefits to chance. Make sure that documents are drafted to ensure that each of your beneficiaries obtains his or her proper share of your IRA. To schedule an appointment to discuss your retirement trust, contact me today. Serving clients in Stamford, Greenwich, and all of Connecticut & NY.

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Office Locations
  • Stamford Office
    One Canterbury Green
    201 Broad Street, Suite 620
    Stamford, Connecticut 06901
    Phone: 203-332-5761
    Fax: 203-547-6800
  • New York Office
    One Grand Central Place
    60 East 42nd Street, Suite 4600
    New York, New York 10022
    Phone: 833-332-8670
    Fax: 203-547-6800
  • Bridgeport Office
    1000 Lafayette Boulevard
    7th Floor
    Bridgeport, Connecticut 06604
    Phone: 203-333-9441
    Fax: 203-333-1489
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