How to Handle Retirement Accounts as Part of Your Estate Plan

8:34 pm Estate Planning, Retirement Planning, Tax Planning

ira e1346184593476 How to Handle Retirement Accounts as Part of Your Estate PlanA recent Wall Street Journal article pointed to the fact that when people fail to pay attention to the best way to handle retirement accounts as part of their estate plan, dire consequences can ensue.

Too often, retirement accounts are ignored, even when they make up a large portion of an estate.  The retirement account owner assumes that all they need to do is name a beneficiary and that will take care of that.

However, if you have established a trust to distribute assets to children over time and named those same children as beneficiaries of your retirement accounts, they will receive all those retirement funds at once, which will circumvent the goal of the trust you spent the time and money to establish in the first place.

Another common error is when people either forget to change the names of beneficiaries on a retirement account after a divorce or they name a new spouse with no provision for children from a prior marriage.

Married couples should also revisit the beneficiary status of their retirement accounts because of the relatively new portability rule, which allows spouses to share their estate tax exemptions.

In addition, those who plan to leave assets to charity should consider doing so from their retirement accounts, since individuals who inherit IRA assets will be subject to income tax while a charity will not.

To make sure your retirement accounts are planned for properly in your estate plan, contact our Orange County law firm.

Leave a Comment

Your comment

You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Please note: Comment moderation is enabled and may delay your comment. There is no need to resubmit your comment.