Probably.

Your kids will receive a call from the IRA plan custodian who will offer them the option of getting a lump sum check or perhaps opening an inherited IRA. Guess what? The will probably take the lump sum. The will also probably burn through it in less than a year. Then they will find out that they have to pay income taxes on the distribution. Not a pretty picture and probably not what you intended for your hard working in saving the money in the account.

There is a better way. Creating a Stand Alone Retirement Trust (SRT).

Though it isn't a new tool, the Stand Alone Retirement Account Trust has become a smart tool for people who will leave a substantial IRA or 401k to their spouse or children. An IRA Stand Alone Trust is great way to manage and protect these accounts by naming the Trust as the designated beneficiary of the retirement plan.

Leaving the retirement account to a SRT with your family as the beneficiaries in the SART allows you to direct how the assets will be distributed and gives you the opportunity to allow the funds to grow at an accelerated pace over the course of more than one generation. The SART will have its own terms and conditions for how the beneficiary may access them.

There are plenty of advantages to establishing a Stand-Alone IRA Trust.
• First and foremost, it can protect funds in the trust from lawsuits and garnishments including divorce.
• Even better, if used property, an SRT will allow the assets to grow exponentially overtime creating dynasty type wealth if distributed as you direct.
• It also provides income protection for individuals who might receive government needs-based benefits — like a special needs child.
• The trust let's beneficiaries know that the IRA shouldn't be cashed out immediately due to adverse tax consequence.
• For a blended family, it will help provide for surviving spouse and children of a previous marriage. That way, the ones you care about can't be cut out of the estate by a current family member.
• It allows you to determine succession and control of the account in case of an untimely death of your intended beneficiary.

An SRT is part of an overall estate plan and is not for everyone. In addition, it has to be done correctly in line with legal and tax requirements so not every attorney has this knowledge. If you think that some portion of your retirement asset will go to family members, it makes sense to explore whether this is a good plan for you. Sitting down with your financial planner and an estate planning attorney to see if this is a good strategy for you is probably the best way to proceed.