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A highly tax-effective way to plan for retirement

Phoenix Retirement Account Trusts AttorneysKeeping tax manageable when you retire is an important part of estate planning.

The last thing you want is for your hard-earned assets to dwindle through a lack of planning and paying unnecessary taxes.

Special trusts can help you navigate this.

We’ll help you:

  • Set up a retirement account trust that protects your retirement income
  • Shield assets from excessive taxes or claims
  • Avoid potentially costly estate planning mistakes

Which type of retirement account trust is right?

A retirement account trust is an important estate planning tool that designates a trust as the beneficiary of your IRA or other retirement plans. 

It is especially effective if your combined (husband and wife) retirement income exceeds $150,000.

The main benefits of a retirement account trust include:

  • Maximizing income tax deferral and wealth accumulation over your child’s lifetime and possibly over your grandchild’s lifetime
  • Minimizing estate and generation-skipping taxes
  • Guaranteeing that your assets reach your desired beneficiaries over generations
  • Protection from creditors and divorce

A retirement account trust is different from a living trust.

There are two basic types:

  1. Conduit trust – where the trust is designated as the IRA beneficiary and the beneficiary of the trust is an individual named in the trust document. Upon the death of the IRA owner, the trust beneficiary receives payments (Required Minimum Distributions or RMDs) from the available funds.
  2. Accumulation trust – instead of Required Minimum Distributions being paid out, this trust keeps growing from the inherited IRA assets. Note that this may not be the most tax-effective way to set it up but it can help protect funds if the beneficiary is financially unreliable or is likely to face legal action (assets are protected from creditors).

What does it mean to “stretch out” RMDs?

Stretching out RMDs refers to the ability, under IRS rules, for beneficiaries of an IRA to compound their taxable Required Minimum Distributions over their own life expectancies.

This can help the trust grow significantly and tax-effectively.

So, beneficiaries can withdraw only the RMDs from their inheritance, while the account can grow year on year.

This may well leave a large lump sum remaining at the end of the beneficiary’s own life, which can then be passed on to their children and help fund the next generation.

Set your trust up correctly to avoid later problems

As a complex area of estate planning, it is important to receive the appropriate legal advice before attempting to set up a retirement account trust.

The income tax stretch out of RMDs is not an automatic process. It requires an experienced hand to plan for this and set the trust up correctly. 

Besides, your family may not be aware of the tax regulations, which can end up costing them dearly. 

For instance, they may:

  • Risk losing out by withdrawing the entire amount from the trust
  • Attract needless estate taxes or generation-skipping taxes (40 percent)
  • Waste funds through inadvisable spending or investing
  • Be influenced by poor advice or an unscrupulous third party
  • Waste funds through a divorce if the trust is not correctly planned

It is important to go through an educational process with the beneficiaries you nominate with a retirement account trust. 

In fact, this advice applies to any and all trusts that you set up.

We can also help you arrange:

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Testimonials

When it was time to update our estate plan we turned to Kent Phelps.  We were only two days away from an extended trip overseas and needed it done fast but done right – especially with a child who has special needs.  Our documents were completed, signed, notarized and witnessed in a day! And we were confident it was done right because we had the help of an experienced attorney.  So grateful to Kent for going above and beyond so we could enjoy our trip with peace of mind!
Sarah & Andy Weir
We had known for many years that we needed an estate plan but just never got around to doing it.  Our son hired Kent Phelps to do his estate plan and encouraged us to contact Kent and get it done – so we did!   We immediately felt like Kent “got” our unique family situation and knew just what to do. We wish we had done this sooner but what a great feeling it is to know that what we’ve worked so hard for all these years will be protected and go to the right people when it’s our time.  We highly recommend Kent to anybody who needs an estate planning attorney.
Christine & Arvon Jones
Amazing In Every Way! Kent was amazing. He excelled in communication, and he was very understanding and listened to our unique situation. He explained everything in detail and was an amazing advocate for what we wanted to do. I would highly recommend him and his services. 
Eric Zimmerman
We were looking for an estate planning attorney and were referred to Kent Phelps by a friend.  We felt like he really listened to us as we talked about our family and business and what we wanted to accomplish.  Kent took the time to help us understand how living trusts and LLC’s work and how they can help protect our family and property.   The fixed fee approach was also very appealing to us. We were excited when we received our estate planning and LLC notebooks! Being able to have instructions in our trust that make sure our children receive what we leave them in a way that will truly help, rather than harm them has given us the peace of mind we were hoping for.  So grateful we found Kent!
James & Tiffany Larson
Mr. Phelps has provided exceptional work and advice. I have recommended many family and friends to Mr. Phelps because of his professionalism.
Melissa Debnar
Kent’s unique perspective and focused expertise set him apart from his peers. His willingness to completely understand his client’s goals, and only then offer appropriate suggestions is refreshing. With an ability to take complex asset protection strategy and explain it in common context, it is easy to recommend him.
Tim Norris
Mr. Phelps’s services have been used to handle some amendments to business documents following my divorce. The amendments were thorough and filed in a timely manner. While this was a simple transaction, I fully expect the same level of effort on complex transactions. I highly recommend Mr. Phelps for legal needs.
Lance Weber
Kent has ideas and solutions that were very valuable to us. I have recommended Kent and his firm to many of my associates.
Fred Buck
Kent is an exemplary advocate for his clients. It is an honor to have worked with him and witness his high ethical standards.
Kenneth Shapiro

Upcoming Seminars

Peace of Mind Through Proper Estate Planning  

Presented by Attorney Kent Phelps

Monday, March 16, 2020

6:30pm

Sullivans Steakhouse
1785 East River Road
Tucson, AZ 85718

(Dinner Served)

SEMINAR FULL - Call (833) 927-1031 to get on the wait list

Peace of Mind Through Proper Estate Planning  

Presented by Attorney Kent Phelps

Tuesday, March 24th, 2020

6:30pm

Sullivans Steakhouse
1785 East River Road
Tucson, AZ 85718

(Dinner Served)

SEMINAR POSTPONED DUE TO COVID-19 - Call (480) 771-0707 to be first in line for the reschedule!