Why Make Your Retirement Fund Beneficiary a Trust?
You may seem to have two goals that are at odds. You want to set aside a nice nest egg for your future heirs to enjoy. However, you also want to build up funds so that you are comfortable after retirement, even if you live to a very old age. How can you make your estate planning and retirement planning work together? The secret may be to make your trust the beneficiary of your retirement fund.
Mistakes Heirs Make with a Retirement Fund
It may seem to make sense just to leave your retirement fund directly to a beneficiary. After all, the funds won’t go through probate. However, there are some mistakes that a grieving heir may make which could seriously affect a retirement fund. For example:
- Taking the funds too soon – Your beneficiary may not realize there are large penalties for taking the retirement money too soon.
- Taking the funds all at once – Taking the fund in such a lump sum could result in half of what you saved going to Uncle Sam instead of your beneficiary.
Leaving the funds to a trust means that you can appoint a successor trustee to help dispense the funds at the right times. This allows you to leave the fund to your loved ones but not the responsibility of knowing when best to withdraw the money.
Wise Planning for Your Family’s Future
If you have assets, including a retirement account, to leave to your heirs, contact Petrov Law Firm today by calling 619-344-0360. We can help you to settle your affairs today so that your family can enjoy a comfortable future.