Trust as a Contingent Beneficary
Client has an IRA with his wife as Primary Beneficiary and 2 married daughters as Contingent Beneficiaries. He is concerned about protecting his daughters in case they ever get divorced and have marriage issues.
He has talked about using Trusts and would like to know if a trust would provide asset protection he is looking for to protect their interests.
Thanks,
Permalink Submitted by Alan - IRA critic on Fri, 2018-09-14 20:58
Yes, if the daughters inherited through a trust, that money would be protected against creditors including spouses. This factor is more substantial now since the Supreme Court has ruled that an inherited IRA will not receive creditor protection under the federal bankruptcy Act, although there are a handful of states that have passed statutes specifically protecting inherited IRAs in their states. Wife may or may not choose to complete a disclaimer for all or part of the IRA if she is living at the time of client’s death.