Stand Alone Retirement Trusts

A Stand Alone Retirement Trust is a separate trust established for the primary benefit of being named as the beneficiary of a client’s retirement account, in the event the client passes away.  Typically, with a retirement account such as an IRA, the client will name a spouse or a child as the primary or secondary beneficiary of the IRA.  Upon passing away, the retirement plan administrator will contact the designated beneficiaries, who will typically be given the option of pulling all of the funds out of the account and take a check for the lump sum, or establishing an inherited IRA account or roll over IRA account, where the funds in the IRA account will be distributed over a period of time.

Rather than providing the beneficiary with the option of receiving a lump sum check, the client may establish a Retirement Trust, where the retirement proceeds will be paid or distributed to the Trust.  

  • The client will name the intended beneficiary of the retirement account as the beneficiary of the Trust.
  • The client can designate an independent trustee to ensure that the retirement account funds are administered and utilized for the benefit of the beneficiary, in accordance with the terms of the trust, as set forth by the client.
  • The trust can help to ensure that the beneficiary does not deplete or mismanage the retirement account proceeds.

This type of trust is established as a separate or stand-alone trust, as the federal requirements of naming a trust as a beneficiary of a retirement account are very particular, and a standard Revocable Living Trust may not accomplish the objectives of the client or satisfy the requirements set forth by the government for ensuring that the retirement proceeds can be stretched out or deferred over the life expectancy of the beneficiary.