In the past, we have recommended to many of our clients that they name their trust as the primary beneficiary of their retirement accounts if they are single and as the contingent beneficiary if they are married. Naming your trust as a beneficiary of a retirement account can provide many benefits to the trust beneficiaries not otherwise available, including additional flexibility, as well as protection from creditors, bankruptcy, divorce, reckless spending, and government benefit disqualification.

However, the new SECURE 2.0 Act and its proposed regulations can cause retirement accounts payable to trust to be subject to income taxes over 5 years, which commences at the death of the retirement account owner. Many of these new rules are effective and apply to decedents passing away on or after January 1, 2023. But there are strategies available that allow a properly drafted trust to defer the income taxes for at least 10 years, and in some cases over the life of a trust beneficiary. As a result of these new rules, careful consideration and planning should be implemented. We recommend you give our office a call to schedule a time for us to review your plan of distribution and beneficiary designations on your retirement accounts.

We look forward to the opportunity to assist you, and thank you for entrusting Piercey & Associates, Ltd. with your estate planning.