Understand how a see-through trust can be used in retirement planning.
The objective of adding to a retirement plan should be to allow retirement assets to grow tax-free for as long as possible. However, the law requires minimum distributions, both when the participant reaches a specific age, and after the participant dies. The default rule provides that a retirement plan must be distributed within five years after the participant’s death, unless the participant names a designated beneficiary. But what if the participant doesn’t want to give the retirement assets outright to the beneficiaries? Perhaps they want to shelter the retirement nest-egg from creditors or prevent them from being wasted by a potential spendthrift beneficiary. If so, using a trust would be ideal. This video reviews see-through trust planning and discusses types of see-through trusts.
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