When it comes to estate planning, there are a wide variety of details to be considered. Fortunately, a qualified Newport Beach wills and trusts attorney can help sort out the requirements and ensure that your estate planning best reflects your wishes. These may include money, real estate, family heirlooms, child custody, and many other issues such as retirement funds, all of which may be covered in a will or a living trust.
Perhaps surprisingly, retirement funds shouldn’t pass through the will. Instead of naming the estate as the beneficiary, it is recommended to name an individual or trust for each retirement account in question. This helps reduce the tax consequences for the person receiving the funds.
Because retirement accounts are something you invest in long-term, it is not unusual for the original institution holding the account to have been sold, possibly multiple times. With each year and each sale, the potential for lost documentation rises, so it is a good idea to either track down and keep a signed beneficiary form or to complete a new one. Your Newport Beach wills and trusts attorney can help you find or recreate this document.
If you wonder why this could be so important, keep this in mind: It is the responsibility of a tax payer to prove that a beneficiary was actually named. If the original form has been lost, it is of little consequence to the institution, but it can have pretty big implications for the beneficiary. By taking care of this situation now, a host of difficulties and red tape (and potential lost benefits) can be avoided later.
When retirement plans can be rolled over into an IRA, it is certainly worth considering. Again, a wills and trusts lawyer can help determine the best course of action, but by rolling the money over into a child or grandchild’s IRA and stretching payments out over the course of his or her life, the payout can be significantly higher and even act as a retirement plan for the younger beneficiary.
There are different requirements for collecting a retirement account, depending on who the beneficiary is. The age of a spouse, for example, can affect choices made for an IRA, as well as how it is distributed. The time over which an IRA can be distributed also changes depending upon the beneficiary, whether it be a spouse, non-spouse, or an estate.
If you have questions about how to handle your own retirement account or the options for an inherited one, contact your Newport Beach wills and trusts attorney for guidance and suggestions.