If you are setting up a trust in Florida or even reviewing an existing one, now could be the time that you want to consider including your retirement funds in the trust. Because retirement funds have designated beneficiaries associated with them, they are not generally included in the provisions of a regular will. As Forbes explains, this approach is consistent with how life insurance policies are handled in estate planning.

The existence of beneficiaries does make the inclusion of retirement assets in a trust optional and doing so is generally done if you have special circumstances or wishes you are trying to outline. One example of when it may be a wise choice to do this is if your retirement account beneficiary is a minor or even still relatively young. You may not necessarily want a 20-year-old to receive a lump sum of money for obvious and logical reasons.

In other situations, putting your retirement fund in an asset could benefit an heir down the road if they experience financial difficulties. This is because the assets in the trust may be free from the hands of their creditors, even if they file a Chapter 7 or Chapter 13 bankruptcy. People are allowed to take money from a trust over the course of more years than they are from a retirement account. Your heirs in this case would then be able to let the fund mature for a longer period of time and potentially increase in value while being sheltered from taxes at the same time.

To include your fund in a trust, you will want to ensure that the trust is reflected as the fund beneficiary. This information is not intended to provide legal advice but general information about putting retirement assets into a trust in Florida.

Luis E. Barreto