specific-situations

Spendthrift Protection for Beneficiaries

Trusteed IRAs can help make sure your savings last, even when you may have account beneficiaries that have not shown that they have the financial maturity to manage large sums of money. With a Trusteed IRA, you may restrict the payouts to the beneficiaries so that they cannot demand a withdrawal of all the funds or close the IRA. You can also elect to terminate these restrictions upon the heirs reaching a certain age. The Trusteed IRA can provide you with an estate-planning tool without the cost of a separate conduit trust.

The Blended Family

Trusteed IRAs allow you to name your surviving spouse as the primary beneficiary but restrict the distributions to income and RMDs (Required Minimum Distribution). This allows Members Trust Company to act as Trustee and use discretion to make principal distributions for his or her benefit based on the health, education, maintenance and support standard. Children from the prior marriage are named as the successor beneficiaries. After the death of the IRA owner, the remainder beneficiary designations are irrevocable and may not be changed by the surviving spouse. Essentially, the Trusteed IRA can act as a marital trust to provide support to the surviving spouse while the remaining balance is then paid to the children.

Avoidance of Guardianship & Probate

With a Custodial IRA, your incapacity as the IRA owner would require your family members to petition a court for a guardianship appointment unless a durable power of attorney is in place. Members Trust Company, acting as Trustee of the Trusteed IRA, with investment discretion during your incapacity, can invest your IRA assets, and ensure RMDs are made and pay your routine bills. This avoids the expensive process of a guardianship or the risk that often arises with the use of a durable power of attorney. The Trusteed IRA allows the account owner to name contingent and remainder beneficiaries to avoid probate of the IRA in the event a primary beneficiary predeceases the account owner.

Implement a Stretch Out Trusteed IRA

You can roll over your 401(k) or other qualified retirement plan into a Trusteed IRA and preserve the tax advantages of these investments vehicles for future beneficiaries. With a typical IRA, the named beneficiary has unrestricted rights to withdraw any and all funds from an IRA. If this happens, there is a taxable event. With a Trusteed IRA, distributions can be regulated among your beneficiaries, allowing assets to continue to grow tax-deferred or tax-free, depending on the type of IRA. Thus, you can stretch the tax benefits of these qualified assets beyond your lifetime. You can also allow Members Trust Company as Trustee to use discretion to make principal distributions for health, education, maintenance and support.