Utah Retirement Trusts

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Utah Retirement Trusts

Ensure Retirement Assets Stay in the Family


Qualified Retirement Accounts in a Nutshell

Qualified Retirement Accounts such as IRA and 401(k) accounts are tax-deferred, meaning that no taxes are paid when you contribute to the account. Your taxable income is reduced by the amount of the contribution the year it is invested. Furthermore, the money grows in the Retirement Account tax free for the length of time it remains in the account. However, when it is withdrawn the government taxes the distribution as income. For reference, Taxes in the amount 30 percent of withdrawals are not unreasonable. The government has a system in place to make sure it gets paid its taxes by forcing required minimum distributions generally when a person reaches 70 and a half years old. 

Retirement Accounts and Standard Trusts

The conventional norm for retirement accounts such as IRA and 401(k) accounts is to leave these to your spouse and then descendants as inherited retirement accounts. In fact unless a trust has the appropriate provisions, leaving retirement accounts to a standard living trust can result in a big surprise tax bill to your descendants from the IRS.

When an individual inherits a retirement account, the payout schedule is adjusted to that beneficiary or beneficiaries’ life expectancy. In plain English this means that your descendants will not have to take distributions from the retirement account until they are in their retirement years. However, when the beneficiary of a retirement account is a living trust or other entity, payout is not stretched based on a life expectancy but instead is required to pay out over just few years. Distributions from retirement accounts count as ordinary income and are taxed as such. Thus, if a beneficiary is still working and is forced to take a distribution that should have been held until after retirement, much of the distributed money may be lost to income taxes.

Utah Retirement Trust Can Protect Funds and Skip Extra Taxes

Unlike standard Trusts, a Utah Retirement Trust will contain language that allows funds to be held for descendants based on their life expectancy so you get the benefit of protecting funds in trust without the onerous tax burden of having these funds distributed before your descendants are ready and retired.

When Would I Use a Utah Retirement Trust?

Qualified Retirement Accounts such an and IRA or 401(k) have certain legal protections from creditors and bankruptcy. In Clark v. Ramaker, the United State Supreme Court held that these legal protections do not extend to inherited retirement accounts. So if you have beneficiaries who are insolvent or deep in debt, have serious medical concerns or have their own children with medical problems, there may be risk that your retirement accounts could wind up in the hands of a beneficiary’s creditors. Another common concern is that a child will not be able to manage the fund correctly and waste it with early withdrawals. We also see a Utah Retirement Trust used for at risk beneficiaries such as those struggling with addiction, for children and adults with special needs. The Utah Retirement Trust can protect funds for future generations without falling for the IRS Tax trap.

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Veterans Benefit Planning Utah Law Firm Morgan & Associates
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Sami Draper
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Answers the phone on the weekend and is so willing to help you on their days off. Extremely helpful and friendly.read more
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Charlotte Stock
17:23 01 Feb 19
Christopher Morgan listens closely and is very knowledgeable about Utah law concerning estate planning, health care directives, and wills. I was amazed at his ability to give me the help and advice I needed to be completely satisfied and at peace with every document he made for me. He certainly has my vote of confidence. I highly recommend him to everyone. Charlotte Stockread more
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Janelle Wakley
22:23 25 Jan 19
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JoAnna Hall
JoAnna Hall
17:14 21 Dec 18
If you're looking to get your estate planning, trust in order, Chris is the guy!! He is so thorough and explained everything in terms we understand and knows what he is doing! Very pleasant experience and we HIGHLY recommend him! Thanks Chris!read more
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Joe Clements
19:25 05 Dec 18
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Ben Tyler
05:57 02 Nov 18
My wife and I hired Chris Morgan to help us with our Estate Planning documents and could not have been more pleased! Chris was responsive to our every need, flexible in his scheduling, patient and clear in educating, sensitive to our interests, and produced a product which far exceeded expectations. But this really didn't surprise me, considering the raving reviews he's received from his clients. With binder of completed documents in hand, my head will rest more comfortably on my pillow tonight. Thank you, Chris, for making our most important priorities your own. We look forward to receiving our first Christmas card :).read more
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Bonnie Hill
21:32 31 Jul 18
Chris was really great to work with! On our first meeting he was very knowledgeable and funny and easy to talk to! He explained things and addressed all our concerns and questions. He made things fun and eased any tensions. He seems honest and fair. The best part is that he was willing to come to our home for the meeting. He was easy to work with schedule wise as well. I would definitely recommend Chrisread more

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