August 27, 2013

One important asset that many people pass on to their beneficiaries is their Individual Retirement Account (“IRA”). For many people, it is important to protect their beneficiaries from immediately draining the IRA. A recent article discusses the new option of a Trusteed IRA, which helps to prevent this outcome.

A relatively new financial product, the Trusteed IRA is offered by several financial firms. Trusteed IRAs are marketed towards affluent investors who might otherwise put their IRA in a trust. Through a Trusteed IRA, the bank becomes trustee over the IRA assets. The bank then works with the beneficiary’s financial advisor in order to manage and distribute the assets.

If you are interested in a Trusteed IRA, be sure to discuss it with your CPA, financial advisor, and estate planning attorney. These members of your professional team should review the plan thoroughly and be comfortable with how the Trusteed IRA will be managed. A carelessly set up Trusteed IRA may impact an individual’s ability to utilize his or her estate tax marital deduction. The marital deduction, which is vital to many high net worth married couples, allows the estate of a deceased spouse to pass, tax free, to the surviving spouse.