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IRA Inheritance Trust® in Texas

The “Stretch out”

It’s not often we see the words “Congress” and “Tax Relief” in the same sentence, but Congress made tax saving waves in 2003 by substantially changing the taxation of tax-deferred retirement accounts for beneficiaries.  This law change affects investments in tax deferred retirement accounts such as 401(k), 403(b), Traditional IRA, Roth IRA, SEP, and Keogh accounts, among others.

No longer will a beneficiary be forced to withdraw all of your hard earned, tax-deferred investments in a very short five year period after you die.  This old rule had devastating effects on the taxable income of your beneficiaries, including pushing them into higher income tax brackets, imposing tax liability each year on all future investments, and importantly, leaving their inheritance vulnerable to creditors and predators of all types.

After the 2003 law change, beneficiaries of your retirement accounts may choose to “stretch” distributions out of the Inherited IRA account over their individual life expectancies! This means that a beneficiary is only required to withdraw a small portion of the total value of the account each year, leaving the rest of the money to grow tax deferred!

How about an example?

The Facts:

  • The total value of your IRA accounts is $200,000 at your death,
  • Your child is age 50 when he inherits the IRA accounts,
  • The IRA accounts grow at 6% per year, and
  • Your child only takes out the required minimum distributions.

Just look at these incredible numbers...

At age 85 your child will have already received about $1,000,000 in distributions and still have almost $500,000 remaining in the IRA accounts (which may continue to grow tax deferred and eventually be passed on to your grandchildren!)

As result of the "stretch" rules, your IRAs and similar tax-deferred accounts may be well worth more than $1 Million and may be the very largest assets you pass on to your loved ones.

Great news…but what’s the catch?

Now that your children can “stretch” minimum distributions over his or her life expectancy, that money has the potential to grow, tax deferred, for many years to come.  But what happens if someone takes that Inherited IRA account from them in a lawsuit? What happens if your child is a poor money manager or a spendthrift?  What if you want to leave IRA money to your minor grandchildren, and you unwittingly force those grandchildren through a guardianship after you die in order to get it?  What if you leave IRA money to a young adult who doesn’t do the “Stretch Out,” but unwisely wastes the money and does a “blowout” instead?

These concerns and more threaten beneficiaries of your retirement accounts.  Fortunately, there is something that you can do to protect your family.

The IRA Inheritance Trust®

The IRA Inheritance Trust® is a unique trust specifically designed with your retirement accounts in mind.  Using this trust can not only insure that your children may take full advantage of the 2003 “Stretch” rules, but can also give them lifelong protection from the many ways they could lose that inheritance. 

To learn more about how this tax law change can positively affect your children and grandchildren, including examples of how your retirement accounts can continue to grow even after you pass away, please come to our FREE SEMINAR

For more information about IRA Inheritance Trusts®, please click here to select a seminar to attend and register today!

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We invite you to attend our FREE estate planning seminar. The focus of the seminar is to educate you, our neighbors, about some of the various estate planning tools available to you. Not only will you have a free interactive presentation from one of our lawyers, but there will be a question and answer period with a lawyer to help clarify any thoughts you might have during the presentation.

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  • Well organized, informative, useful and practical seminar presented in an interesting and even entertaining manner!
    L.A.H., Baytown, TX
  • Sure wish I’d had this seminar before I had my trust created. Excellent presentation and Q & A.
    J.B., Baytown, TX
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Vacek & Thain, PLLC serves Texas families with their estate planning, estate tax planning, charitable planning, revocable living trusts, irrevocable trusts, Heritage trusts, wills, power of attorney, family limited partnerships, advanced asset protection planning, declaration of guardian for minor children, healthcare documents, will based estate planning and the hazards of will planning, special needs estate planning, estate administration and trust administration. Contact Vacek & Thain, PLLC if you or your loved ones reside in the Houston, Texas area, including: Katy, Cinco Ranch, Mission Bend, Pecan Grove, Richmond, Rosenberg, Greatwood, Sugar Land, Meadows Place, Bellaire, Fresno, Pearland, South Houston, Spring Valley Village, Pasadena, Clear Lake, Friendswood, and more!

Copyright © IMS. All rights reserved. You may reproduce materials available at this site for your own personal use and for non-commercial distribution. All copies must include this copyright statement. Some artwork provided under license agreement.