Pros and Cons of Putting Retirement Assets in a Trust

Pros and Cons of Putting Retirement Assets in a Trust

As you go through the process of naming beneficiaries for your retirement accounts, consider naming a trust rather than an individual. This, however, can be rather complex. The complication centers around whether the retirement assets can be stretched out over the beneficiary’s lifetime or are required to be distributed much sooner.

Here are some of the pros and cons of naming a trust as your retirement account beneficiary.


The situation in which naming a trust as your retirement beneficiary is most ideal is if you have minor beneficiaries, beneficiaries with special needs or an heir who simply cannot be trusted to manage large amounts of money. This allows you to take greater control over the distribution of those assets through a trustee to set your beneficiaries up for success.

Naming a trust can avoid the owner of the retirement plan from periodically updating their beneficiary designations if a primary beneficiary dies by naming successor beneficiaries.


If there are multiple beneficiaries in a retirement benefits trust, it is important to consider how each beneficiary is classified under the tax code. Certain classifications of beneficiaries may affect the amount and timing of the required retirement distributions. If you have multiple beneficiaries of varying ages and health, this could become problematic, and result in you and your beneficiaries from being unable to maximize the most favorable tax treatment .

You should carefully consider your beneficiary plans and discuss any questions you have with an attorney before making any final decisions. To learn more about setting up trusts to use as beneficiaries for your retirement accounts, contact a trusted Tampa, FL estate planning lawyer at BaumannKangas Estate Law.