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Trusts can be named as IRA beneficiaries

Many people utilize individual retirement accounts to save money. An IRA is an important account, and no Arkansas resident wants the funds to go to just anyone in the event that the account holder cannot collect the funds him or herself. Though retirement accounts are typically payable-on-death accounts, rather than naming a person as a beneficiary, some parties may want to use trusts.

It is not uncommon for trusts to act as beneficiaries of retirement accounts. Using this tool could allow account holders to ensure that the funds go to the intended person, but the account holder still has some control over the use of the funds. However, because the Secure Act categorizes beneficiaries and the amount of time designated to withdraw the funds, it can be more complicated. When it comes to using a trust, the beneficiary or beneficiaries of the trust will determine which category is used.

Trusts can offer certain protections when used to receive retirement funds. For example, some people may not be responsible with money, and putting the funds into a trust could ensure that the beneficiary does not spend all of the funds or use them for unwise purchases. A trust could also help a person ensure that children from a previous marriage as well as a current spouse benefit from the funds.

Though it can be useful to name trusts as beneficiaries to IRAs, it can be a complicated step to take. As laws and regulations change, Arkansas residents may have an even more confusing time trying to determine whether this is the right step for them. Fortunately, knowledgeable attorneys are available who can help walk individuals through the various information needed to make a sound decision.

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