Atlanta trust lawyers are abuzz following a recent US Supreme Court decision that will have big implications for clients. The fact that these professionals keep up-to-date on legislation and court decisions that affect their clients is one of the most important reasons not only to hire an estate planning lawyer in the first place, but also to check in with the attorney at least annually to see if any changes need to be made to a previous plan in light of new information.
While a person’s own IRA can be protected in the case of bankruptcy, the court has determined that an inherited IRA cannot. While that is big news for those who have already inherited an IRA, it is a call to action for those planning to leave one behind. Being aware of the consequences of the Court’s decision can drastically change the approach to planning in order to protect heirs from this new development.
It is common for estate planning lawyers in Atlanta to see clients who have much of their wealth in the form of an IRA or 401(k). During the planning process, they determine how that money should be used after their death. It often makes up a large part of the estate they intend to leave behind. As of recently, this was commonly done by placing it into a Revocable Living Trust. Now, however, if the heir declares bankruptcy, that money can be taken away.
A Real-Life Example of Savings and Loss
The possibility of losing an inherited retirement account in this manner is more common than you might expect. Take for example the case of Joan and Robert. Robert worked hard to save for retirement, accumulating $450,000 in his 401(k). Unfortunately he was also diagnosed with a serious medical condition and accumulated over $300,000 in medical debt before he passed away.
After his death, his wife transferred the funds of the retirement account into an “inherited” IRA so that she could access the money without having to pay a 10% penalty before age 59 ½ . That money was her lifeline.
However, the medical bills spiraled out of control and were eventually turned over to a collection agency. Unable to pay back the balance, Joan was forced into bankruptcy. Little did she know that the money in her “inherited” IRA could now be seized by creditors during the bankruptcy proceedings. Had Robert planned for this possibility, the funds would have stayed protected.
Protecting Wealth In An IRA For Beneficiaries
In order to protect money in an inherited retirement account, many estate planning lawyers in Atlanta are now recommending that their clients consider setting up a Standalone Retirement Trust. This type of trust can protect against other threats, too. Basically, it makes the money inaccessible to any future creditors of the trust’s beneficiary because the trust was not established or funded by the beneficiary. By naming an independent trustee rather than having the beneficiary play this role, there are even more protections in place. An Atlanta trust lawyer can offer a variety of suggestions on how to choose the appropriate trustee.
There are some fairly stringent guidelines that need to be followed to make sure the trust works as intended. A trust lawyer in Atlanta will need to make sure these regulations are adhered to so that the trust can qualify. When done properly, the trust’s distributions can be made similarly to how they would have from the IRA without the risk from the beneficiary’s creditors.
Whether you are just beginning the planning process or you have already created an estate plan, this big decision by the US Supreme Court can affect you and those you leave behind. Make sure to contact your trust lawyer in Atlanta to ensure that your IRA is protected for the next generation.
While trust lawyers in Atlanta, Georgia, have seen first-hand how important the right legal documents are, we also understand that there is no one-size-fits-all approach when it comes to estate planning. For example, the needs of one family will likely be completely different from those of another. Likewise, a certain single professional may benefit greatly from working with an estate planning lawyer, while another would have very little need at this point in his or her career.
So, how do you know what you need? The real answer is probably that you should talk to a trust lawyer in Atlanta, but that sounds a little self-serving. Instead, here are a few circumstances to get you started, and if you find that they get you thinking about what might be right for you, then it’s probably time to hire an attorney.
Footloose and Fancy-Free
For those who haven’t gotten married or had children yet, it’s likely that you don’t have much need for an estate planning lawyer. The biggest exception, however, is the need to create medical directives. These are necessary for everyone to ensure that your wishes are followed when you are not able to speak for yourself. To be fair, the younger individual who has a lot of assets, lives a high-risk lifestyle, or is seriously ill would want to look into more in-depth estate planning services.
Once you’ve made a commitment to someone that stops short of marriage, you will likely want to get an estate planning lawyer involved. This is due to the need for a will to protect your partner and ensure that he or she is entitled to assets and the ability to make medical decisions for you, if that is what you prefer. The attorney will help you put together durable powers of attorney, as well as to help direct what happens to your shared and individual property should you pass away.
Married, With Children
If you have children, the need for an estate planning lawyer becomes increasingly urgent. One of the most important things you’ll want to do is to name a legal guardian for any minor children. Along those same lines, you will probably want to use your estate plan to help create a financial plan that will support those young children should you be unexpectedly killed or incapacitated. This might include setting up some kind of a trust that will be managed for their care.
A Little Gray
Watching the kids grow up and seeing retirement ahead certainly do lead many of us to start thinking about estate planning. At this point in life, you’re interested in saving for your own future, as well putting together a plan for what you leave behind. An Atlanta GA trust lawyer is essential at this point to make sure you are maximizing your assets, avoiding unnecessary taxes, and making sure that your wishes are clearly laid out.
Facing Your Own Mortality
There are points in our lives where we are faced with our own mortality, and these are often the impetus for getting in touch with an estate planning lawyer. For example, if you have been diagnosed with a serious illness, you may find it comforting to get your affairs in order. Likewise, elderly folks generally find that they have reached a point where it makes sense to determine their legacies through estate planning.
If any of these situations resonate with you, it may be time to consider the services of a trust lawyer in Atlanta. He or she can help you work through your desires and create the appropriate set of legal documents that best meet your needs. Most importantly, by forming a relationship now with an attorney, he or she can help you make great choices based on the stage of life you are in. Staying one step ahead of the game is always best, and through proper legal planning, your trust lawyer in Atlanta can make sure you are positioned for whole-life security and success.
If you’d like to explore your options, call us at 770-425-6060.