By not properly designating beneficiaries to your IRAs, you run the risk of reducing your family’s wealth potential. The proper execution of your beneficiary designations is of critical importance because improper estate planning could mean that your IRA assets could pass to the wrong people or entities, and you definitely would not want that to happen.
Here are some of the steps that need to be taken to properly name IRA beneficiaries:
Spouse: A surviving spouse can either roll the funds into his or her existing IRA or establish an inherited IRA and take distributions that will be calculated based on his or her life expectancy.
Children: Much like spouses, children can extend required distributions from an inherited IRA over their own life expectancies.
Trusts: A trust can be named a beneficiary of an inherited IRA, but this involves a great deal more complexity. Be sure to consult with a Personal Family Lawyer® for guidance.
Contingent beneficiaries: A surviving spouse may wish to disclaim interest in an inherited IRA, so as to pass on any assets to your children or grandchildren. Therefore, it is important that you name secondary beneficiaries in addition to the primary in order to ensure that your IRA assets remain within the control of your family.
If you’d like to learn more about how to properly designate retirement accounts or other financial assets for loved ones or have other estate planning questions, call our office today at (612) 206-3701 or fill out our contact form to schedule a time for us to sit down and talk.
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