Creating a retirement trust can be a good way to pass on to your heirs money you’ve saved through your IRA or other retirement fund and maximize the benefits of tax-deferred savings over time for them.

The retirement trust you create is named as the beneficiary of your IRA upon your death. The trust then distributes the proceeds of your IRA to your beneficiaries according to the schedule you set. Among several options for structuring the trust, you can specify that it can only dispense the proceeds of the IRA over the beneficiary’s lifetime. This helps beneficiaries avoid the temptation to make a lump-sum withdrawal right away and lose out on the compounding effect of saving over a long time.

Another advantage of retirement trusts is that they protect from creditors and predators. If you only name a beneficiary for your IRA without using a trust, the IRA is subject to that beneficiary’s creditors and predators. For example, if a beneficiary divorces after an inheritance is distributed, their spouse could petition for a division of the IRA assets. But if the trust is the named beneficiary, the spouse can’t claim they are entitled to a division of the IRA assets. And when a beneficiary is a professional subject to creditor claims, creditors can’t access IRA assets inherited by the beneficiary if a retirement trust is involved. Retirement trusts can also be integrated with other estate planning options in tax-advantaged ways.