IRA Trusts offer maximum protection and flexibility while allowing beneficiaries to "stretch" their shares of the IRA over their respective life expectancies. The IRS allows qualified retirement plans to continue its tax-deferral status for the life of your beneficiaries. However, your beneficiary designations must be stated in a very specific manner in order to get this tax benefit. Further, an inherited IRA is NOT asset protected from creditors and nothing stops the beneficiary from spending or losing all your money.
By installing an IRA Trust and properly designating your beneficiaries, you ensure that your qualified plans will pass to your beneficiaries in separate accounts qualifying for long term tax deferral, and you add a layer of asset protection to the otherwise vulnerable qualified plan assets. This is very important because even a $100,000 IRA gifted to a 20 year-old taking the IRS required minimum distributions at a 7% rate of return can be worth $1,900,000!