All it takes is 18 Months for your Retirement Plan to Disappear in Northern California

James Zakasky
An estate attorney who goes beyond drafting wills and creating trusts

Retirement Plan disappear

All it takes is 18 Months for your Retirement Plan to Disappear in Northern California

On average, it takes 18 months for a beneficiary to spend the entire amount of an inherited retirement plan.  That means that your spouse, child or loved one will spend the entire amount of your IRA or 401K within 18 months of inheriting it from you. It is not their fault; the tax code makes it very difficult to keep this money safe and growing into the future. When your beneficiary begins to withdraw these funds to use they must pay income taxes. That can be a stiff amount that may even put them in a higher tax bracket.

What is even more alarming being that a retirement plan is the number one asset that most American’s have when they die. Over Seventy percent of most Americans have a retirement account that they will pass on at death.  

Inherited IRA’s are not protected from creditors and predators.

It’s very hard to look at the what if’s…. like what if my daughter gets divorced or what if my spouse remarries or what if my son files for Bankruptcy…. but these are all realities that come with the ever-changing world that we live in. An inherited IRA allows the beneficiary to cash out your retirement plan or instant access to the cash value of the IRA. If the beneficiary has access then so do the beneficiaries creditors. In fact, the Supreme Court in the landmark case Clark vs. Rameker unanimously stated that an inherited IRA is not exempt from Federal Bankruptcy Protection and that the proceeds from an inherited IRA can be used to satisfy creditor claims.  

The best way to protect your IRA for your spouse and future generations is to invest in a Stand-Alone Retirement Trust. The trust protects against creditor’s such as a lawsuit or Bankruptcy. The trust protects against divorcing spouses and remarriage. The trust allows for the longest allowed stretch out preserving your hard-earned dollars so that your beneficiaries reap the full rewards of your retirement plan and pass that legacy on to their kids.

If you have an IRA, 401K, Roth IRA or other qualified plan please contact The Law Office of James A. Zakasky at 707-595-1148 for an evaluation to determine if you are protected from Creditors and Predators.
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