When you leave this Earth, you want to make sure — to the best of your abilities — that your loved ones are taken care of. While this typically means leaving them your assets and resources, in some cases, you might have to go farther than that.

The reality is that some heirs are undone by having unrestricted access to large sums of money. Through their naiveté, they can associate themselves with bad actors determined to separate them from their cash or fall into dissolute lives blowing their money on drugs, drink and gambling.

In these situations, there are alternatives, and one option is funding an IRA trust. Since a U.S. Supreme Court 2014 ruling (Clark v. Rameker), inherited IRA assets are no longer protected in a debtor’s bankruptcy proceedings. This ruling opened the door to more frequent use of IRA trusts as beneficiaries rather than individual heirs.

The managing partner and chief executive officer (CEO) of one financial advisory firm stated that he thought that “anyone with a sizable IRA should use one if they’re concerned about their heir’s ability to handle the money or if the heir has debt problems.”

The attorney and certified financial planner added that IRA trusts were good tools to use to “protect the kids from the money and the money from the kids.”

If you think that an IRA trust might serve your heirs’ needs best, you must also remember to alter any named beneficiaries on your financial accounts to reflect these intentions. Otherwise, whoever’s name is listed as beneficiary now will receive the money instead, as those directives supersede any listed in a will.

Still have questions? An attorney can review your circumstances and provide advice, guidance and peace of mind.