I want my 401(k) and IRA to go to my spouse when I die — should I name them or my trust as beneficiary?

As with most legal answers, it all depends. It’s certainly simpler to name your spouse directly. Then they can convert the retirement plans to their own IRA and take withdrawals on their own schedule.

However, there are some advantages to trusts. They can provide greater creditor protection than that afforded to retirement funds. They can preserve any funds not needed by your spouse for your children, if any. This can be especially important in the case of second marriages. Trusts can also provide protection in the event your spouse became incapacitated at a later age. It can provide protection from scams for which seniors are special targets and protect assets from having to be spent down paying for long-term care.

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Trusts are also used in estate tax planning. Few Americans now have federally taxable estates with the threshold at just over $12 million. But a number of states have their own estate taxes, with the threshold as low as $1 million in Massachusetts and Oregon. If you live in one of those states, a trust may protect this amount from being taxed upon the death of the survivor of yourself and your spouse.

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In order for a trust to hold retirement plan funds and qualify as a designated beneficiary it must be either a “conduit” or “accumulation” trust. Conduit trusts are much easier to draft and manage. They provide that the annual required minimum distributions be forwarded to your surviving spouse. Accumulation trusts allow these to be retained in trust, but given the complicated nature of these trusts, we generally only use them in special cases, for instance when the beneficiary needs to qualify for public benefits.

Whether your retirement plans should be payable to a trust depends on your circumstances — whether there’s a reason to protect the funds that would go to trust or if you live in a state with an estate tax. Even if you do, you might be able to fund the trust with non-retirement assets and have your retirement fund pass to your spouse.

In Massachusetts, where I practice and where we have the low estate tax threshold, we usually advise clients to name their spouses as the primary beneficiary of their estate plans and their trusts and the secondary beneficiary. This permits the surviving spouse to determine whether to receive the retirement plan outright or have it pass to the trust by executing a disclaimer. A disclaimer permits the surviving spouse to designated property to be treated as if they had died first. In this case, a disclaimer would permit the surviving spouse to designate some or all of the retirement plan funds to pass to the secondary beneficiary, the trust. This way, they can make the determination when more facts are available as to the amount of funds they may have available, their potential estate taxes, and the likelihood that they may need long-term care or be subject to a lawsuit.

Harry S. Margolis practices elder law, estate and special needs planning in Boston and Wellesley, Massachusetts, and is the majority owner of ElderLawAnswers.com.. He is author of The Baby Boomers Guide to Trusts: Your All-Purpose Estate Planning Tool and answers consumer questions about estate planning issues at www.AskHarry.info.