Naming an IRA Trust will  Benefit Heirs  When setting up an IRA, account holders are asked who they want to name as a beneficiary. The first thought is usually a relative or a friend, but there are some circumstances when it might be better to name a trust. For example:  You’re concerned that your child might divorce and want to protect the child's financial interests;  You want to protect your IRA beneficiary from creditor and bankruptcy claims;  You want your children to have your assets in the event you die and your spouse remarries. While you name the trust as beneficiary, you name the person you want to inherit the IRA as the trust beneficiary. With an inherited IRA held in trust, the account should not be subject to a division of marital property so your child would be protected in the event of a divorce. Your IRA should also be sheltered from creditors' claims and bankruptcy.  Let's say you might want to leave your IRA to your spouse, but not outright. Your spouse might need help handling large amounts of money. Or perhaps you and your spouse both have children from previous marriages and you might want to provide for your spouse, yet ensure that the balance of your IRA eventually passes to your own children. In such situations, a Qualified Terminable Interest Property (Q-TIP) trust might be appropriate. All the income generated by a Q-TIP trust must go to the surviving spouse. However, when the survivor dies, the trust assets pass to beneficiaries named by the first spouse to die. In other words, you leave your spouse lifetime income but you decide where the rest of the money in your trust will ultimately go. If the Q-TIP rules are followed, estate tax on trust assets can be deferred until the death of the surviving spouse. (Note that the estate tax exemption will gradually increase to $3.5 million in 2009. The tax is scheduled to be repealed in 2010.)