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David Toback Motto
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What happens if I name a trust as beneficiary as my IRA?

Video Transcription

Many individuals want to name a trust as beneficiary of their IRAs because there are creditor protection benefits and there are income tax savings to be achieved in that case. The creditor protection benefits come in because only in certain states do beneficiaries of IRAs get creditor protection inside the bankruptcy context. You want to have the trust in place to make sure that a beneficiary in one of the unfavorable states still can get some creditor protection.

Also for income tax savings purposes, the trust has to be drafted in a certain way. If it’s not, then not only do you not get the benefits of income tax savings, you can actually accelerate the income tax due on the IRA assets, so it’s very important to see a tax attorney to get a proper trust drafted.

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