Retirement Journey MARCH 2017

Naming a trust as an IRA beneficiary
–by Jeff Bucher

Jeff Bucher
Jeff Bucher







For many Americans, the assets in their Individual Retirement Account represent a significant portion of the wealth they hope to leave to their loved ones. You may have heard that creating a trust and naming it as the beneficiary of your IRA is a good way to direct how your assets are distributed after your death and force your heirs to “stretch” the IRA for generations. However, trusts and inherited IRAs are complex vehicles that have a lot of details to get right.

Here are some of the advantages to naming a trust as an IRA beneficiary:
While directly inheriting an IRA is perfectly fine for many heirs, it can be inappropriate in some situations. Under these circumstances, a trust may be able to help you control how your IRA assets are distributed after you’re gone and help protect your family’s wealth.

Protect minor children:
If you name minor children or grandchildren as beneficiaries without additional instructions, a guardian will likely be appointed by a court, which can be a complicated and lengthy process and may reduce the benefit your heirs get from the inherited assets.

Navigate blended family dynamics: For families with children from multiple marriages, a trust can help you make sure every member of your family inherits according to your wishes.

Provide for children with special needs:
If one of your beneficiaries has special needs, inheriting an IRA could jeopardize his or her ability to qualify for Social Security disability benefits or other forms of assistance.

Avoid spendthrift tendencies:
It’s also worth considering whether you think your heirs can handle an inheritance responsibly once they reach adulthood. Young or spendthrift adults might be inclined to simply cash out the IRA and pay the taxes instead of taking advantage of deferred distributions. A trust can explicitly detail how much your heirs are able to receive each year and delay when they gain control over the assets.

Protect family wealth from creditors:
Trusts can also protect your family’s wealth from divorce and bankruptcy. If you worry that your heirs might face divorce or bankruptcy proceedings, a trust might be worth considering.

How Can We Help?
It could be beneficial to use a financial professional when choosing your beneficiaries on your IRA, which may coordinate all aspects of your estate strategies. Estate planning is a very complex area and it’s beneficial to get the details right. If you haven’t reviewed your estate strategies recently or have questions about trusts, inherited IRAs, or beneficiary provisions, please give us a call. We have helped many of our clients explore their legacy goals and work closely with experienced attorneys and tax professionals who can help you identify the best solutions for your personal situation.

Jeff Bucher is the president and co-founder of Citizen Advisory Group, a comprehensive financial planning company in Perrysburg.
You can contact him at
email at

visit at
770 Commerce Dr.

or on the website at


Investment Advisory Services offered through AlphaStar Capital Management, LLC, a SEC Registered Investment Adviser. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the adviser has attained a particular level of skill or ability. AlphaStar Capital Management, LLC and Citizen Advisory Group are independent entities.