Welcome to the Good Steward Law and Wealth Podcast, hosted by Ledly Jennings. In this episode, we're diving into an essential topic for anyone considering their estate plan—IRAs and the role trusts play in managing them. If you have a revocable trust with your IRA as a beneficiary, especially if it was set up before 2019, it's essential to revisit and update it. The laws surrounding IRA inheritance have changed, and failing to make the necessary adjustments could result in unwanted tax consequences. We’ll explore how the Secure Act impacts inheritance, the benefits of creditor protection through trusts, and the different types of trusts—conduit and discretionary—that affect how IRA distributions are managed. Stick around as we break down the importance of updating your trust and ensuring it meets current standards to maximize tax benefits and protection for your loved ones.

IN THIS EPISODE:

• [0:34] How trusts relate to an IRA 
• [1:14] An example of how the Secure Act impacts inheritance 
• [2:50] Creditor protection, but not in the case of bankruptcy
• [4:51] A See-Through trust needs to meet four standards  
• [8:17] Taxing a trust. A conduit trust and a discretionary trust or accumulation trust and the importance of an updated trust

KEY TAKEAWAYS: 

• Suppose you have a revocable trust with your IRA as a beneficiary, especially before 2019. In that case, it’s crucial to revisit and update your trust to align with new IRS regulations, as failing can lead to significant tax consequences.
• Many people leave IRAs to trusts to protect their beneficiaries, especially in cases where the beneficiary may not be financially responsible or is vulnerable to issues like addiction, creditor claims, or divorce.
• Different types of trusts—conduit and discretionary—affect the management of IRA distributions. Conduit trusts distribute funds directly to beneficiaries, while discretionary trusts give trustees more control over distributions. They provide asset protection but potentially higher tax rates.

RESOURCES:

L. Jennings Law - Website

L. Jennings Law - Facebook

Ledly Jennings - LinkedIn

L. Jennings - Instagram

L. Jennings Law - YouTube

ABOUT THE HOST: 

Attorney Ledly Jennings, founder of L. Jennings Law, specializes in protecting legacies and ensuring smooth transitions of personal and business assets. With offices in Arkansas, his firm offers expertise in estate planning, elder law, probate, and business planning. With a J.D. and MBA, plus valuable experience at Stephens, Inc., the state's largest investment bank, Ledly serves high-net-worth clients and family businesses statewide.