Estate Planning, Probate, Small Business, & Asset Protection

Legally Speaking – Protect Retirement Accounts

Legally Speaking – Protect Retirement Accounts


Retirement assets (401k, IRA, Pension, etc.) currently exceed $26 Trillion, and represent approximately 2/3 of all middle class liquid wealth in America!

Shockingly, your retirement accounts can be seized once they pass to your loved ones.

During your lifetime, your retirement funds are protected and can’t be taken in a lawsuit. Once retirement accounts are inherited, however, the protection evaporates, exposing your hard earned money to any other drama that might affect your loved ones (divorce, bankruptcy, lawsuit).

Consider, therefore, protecting your retirement accounts using a “Standalone Retirement Trust”.

A Standalone Retirement Trust (SRT) is a special type of trust that:

  • Protects inherited retirement accounts from beneficiaries’ creditors as well as predators and lawsuits
  • Ensures retirement accounts go to whom you designate – and nobody else
  • Allows for experienced management and oversight of assets by a professional, if desired
  • Prevents beneficiaries from reckless spending or gambling
  • Enables proper planning for a special needs beneficiary
  • Facilitates other sophisticated tax planning if needed

“Divorce Creditor” – A Common Example.  Many parents are concerned that their in-laws may someday become the “outlaws”; that a child’s divorce will allow an inheritance to be seized by a divorcing spouse.

The Two Stories of Mary and Tom

Story 1:  Mary and Tom love their son-in-law, Mike, and think his marriage to their daughter Liz will last. They gave Liz her share of their retirement savings outright at their deaths ($200,000).  Unfortunately, Liz does not seek tax advice and pays $75,000 right away in income taxes, leaving her $125,000.

Liz decides to invest her remaining inheritance and after five years it grows to $200,000!  Unfortunately, Liz and Mike get divorced and Mike is awarded half, leaving Liz with $100,000.

Story 2:  Mary and Tom love their son-in-law, Mike, but recognize that 50% of all couples end up in divorce. Their Estate Plan passes their retirement savings to Liz using a Standalone Retirement Trust. Liz’ inheritance is invested, providing her Required Minimum Distributions that total $40,000 of income over 5 years.

Unfortunately, Liz and Mike get divorced, but Mike has no access to Liz’ inheritance, which is now worth $240,000, and growing.

Which Story do you prefer?  While every situation is different, an Estate Planning Attorney can help you select the right solution for your Retirement Accounts.  If a large portion of your wealth is Retirement savings, or if you plan on leaving most of your 401k or IRA to the next generation, consult with an attorney so you can better… Leave a Legacy!  Not a burden.

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