What is a Retirement Trust?

Planning for the Future

When it comes to planning for your financial future, there are a lot of different options to choose from. One option that many people don't know about is the retirement trust. A retirement trust can be a valuable part of your estate plan in Michigan. In this blog, learn what a retirement trust is and how it can help you secure your retirement future!

Defining a Retirement Trust

A retirement trust is defined as an irrevocable trust created for the primary purpose of holding retirement assets, such as 401(k)s, IRAs, and other pension or profit-sharing plans. The retirement trust is designed to provide benefits to the settlor during their retirement years and can be structured in a number of ways to achieve this goal.

Why Would You Want a Retirement Trust?

There are several reasons why someone might opt to create a retirement trust as part of their estate plan. One reason is that it can help manage retirement assets and distribute them according to the settlor's wishes. Another reason is that a retirement trust can provide tax advantages. For example, if the settlor dies before they have withdrawn all of the funds from their retirement account. In that case, those funds can be distributed to their beneficiaries without incurring any tax penalties.

How Does a Retirement Trust Work?

A retirement trust works by holding retirement assets in an account that is managed by a trustee. The trustee is responsible for investing the retirement assets and distributing them according to the terms of the trust. The settlor can choose to have the trust pay out benefits during their lifetime or after their death.

Work with an Estate Planning Attorney

Creating a retirement trust is just one way to plan for retirement. There are many other options available, so it's important to speak with a qualified estate planning attorney to determine what's best for you and your family. If you have questions about retirement trusts or other aspects of estate planning, contact the team at Michigan Law Center, PLLC today. We would be happy to help you plan your most effective future.

Learn more about how we can help or schedule a consultation by calling (586) 803-8500 or by visiting our website.