If you have assets valued at more than $199,999 you really should consider setting up a revocable living trust specifically designed to act as the beneficiary of your individual retirement account. Such a trust is often referred to as an IRA Trust, an IRA Living Trust or an IRA Inheritance Trust. Without one your IRA will be stuck in probate, often for months, where your intended beneficiary or beneficiaries will not be able to access it. Also, the courts may decide to divide the account among your heirs in a manner you didn't intend.
Putting your IRA into a trust has many more benefits besides avoiding probate.
For the sake of argument lets use an example whereby you leave a significant portion of your IRA to one of your grandchildren. If they were to receive the entire benefit all in a lump sum they could spend through it in very little time. Or, if you left it to an adult child and they received it all at once they would then have to declare it as income. The dispersed amount would be added to their income driving their tax bracket up. This would leave less of your assets for them to spend.
Now lets pretend that you set up what is called a Stretch IRA. It is a sub-trust within your previously created trust and it allows you to stretch out the payments to your descendants. Now your grandchild can receive the money in a manner that would allow them to learn how to spend their money, and thereby have more money to grow their future in the long run. Looking at your adult child's situation they would receive the money in smaller amounts allowing them to pay a lower tax rate and keep more of the money.
Another benefit of having an IRA trust affects people in second marriages. By keeping the IRA in a trust your current wife can continue to receive access to the IRA and ensure that the remaining balance is left for your children or other beneficiaries. Your future wives won't be able to circumvent your financial wishes for your legacy.
Still another benefit of the IRA trust is protection from creditors upon your death. Without a trust the IRA benefits would be subject to lawsuits brought by your creditors. Also, the IRA trust will be protected from divorce lawsuits brought upon by your children's spouses in the future.
There are so many benefits to keeping an IRA of substantial value inside a trust that creating one should be considered a must. Talk to a lawyer experienced in handling Las Vegas IRA trust formation. You have the power to effect your remaining families life in positive ways. Take that important first step now.