Photo of Professionals at McCoy Fatula, APC
Photo of Professionals at McCoy Fatula, APC

Why individual retirement accounts can’t be placed in trusts

On Behalf of | Feb 28, 2017 | Trusts

Financial issues are usually complex and confusing for those with no formal background in the field. Many people in California hire financial advisers to help them manage their money and investments. Some rely on experienced estate planning attorneys as financial issues regarding trusts and other money matters often overlap with estate planning issues.

Most people are familiar with IRAs. Otherwise known as an “individual retirement account,” an IRA is best known for its reported tax advantages. There are certain penalties incurred if an IRA holder withdraws from the account before the time set forth upon investment.

Also, IRA holders must withdraw their funds just a little past their age 70 birthdays. If they don’t, the penalties may be as high as 50 percent. IRAs cannot be transferred to living trusts. A main issue is that IRAs can only be owned individually and thus have are recorded via a person’s Social Security Number. Most trusts, however, are considered nonperson entities and, as such, are assigned Tax ID numbers rather than SSNs. 

Understanding the differences between trusts and individual retirement accounts, plus other financial/savings options is crucial toward making informed decisions and being able to choose wisely. By requesting a meeting with a California probate and estate administration attorney, various topics regarding IRAs and trusts can be addressed. An attorney is prepared to help a client overcome any legal obstacles regarding these or other financial issues. An estate plan is highly customizable and can be geared toward individual needs and financial goals.

Source:, “Can I put my IRA in my living trust?“, Kenneth Petersen, Feb. 15, 2017

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