Accumulation trust
Certified Financial Planner glossary · Certified Financial Planner
Definition
A trust named as retirement account beneficiary that retains rather than distributes required distributions, protecting the funds at the cost of taxation at compressed trust rates.
Accumulation trust in plain English
An IRA names a trust as beneficiary, and the trustee keeps required distributions inside the trust instead of writing a check to the kids. That structure is an accumulation trust: it can shield spendthrift heirs, but retained income hits compressed trust brackets fast. Contrast it with a conduit trust that must pass each distribution out in the same year. On stems, ask whether the goal is creditor protection inside the trust or tax character flowing to the beneficiary.
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