Specialization Snapshot: Retirement Preservation

While planning for retirement accounts is a very technical area of the law, there are numerous opportunities to incorporate retirement accounts in planning. Two common examples are:

A retirement preservation trust allows clients to transfer retirement assets, like a 401k or IRA, to a Trust without triggering negative income tax consequences. It is generally used when the Trust’s creator is concerned that the beneficiary will withdraw all of the retirement assets in a lump sum, triggering substantial income tax liability. Generally, we automatically include a Retirement Preservation Trust for minor children. It is a unique tool that enables the children to use retirement assets in a controlled manner while preserving the “stretch” benefits, for example, of an inherited IRA. Best of all, the measuring life for the required minimum distributions (“RMDs”) can be the actuarial life of the child.

A Retirement beneficiary agreement is particularly useful for blended families, spouses with different beneficiary desires, and protections against marriages after death. In short, a spouse is generally designated as the beneficiary under the retirement accounts to ensure that the spouse is fully provided for, financially. However, the surviving spouse can change the beneficiaries at any time. A Retirement Beneficiary Agreement is an agreement that ensures the desires of the first spouse to pass are fully honored by restricting the surviving spouse’s ability to change those beneficiaries.