Your estate plan should address all of your personal and business needs. There are many assets to consider when creating a secure financial future for you and your family.
If you want to transfer your retirement accounts to loved ones, then you’ll need to know the ways that you can accomplish this and other estate planning goals.
Working with a skilled estate planning attorney gives you the resources you need to transfer your assets while maximizing their value for your beneficiaries.
Retirement Account Considerations
Most people typically focus on the transfer of real estate property, stock assets, material possessions, and business assets when creating an estate plan.
But retirement accounts can hold significant value and must also be included as part of your financial planning for the future.
They’re often treated differently than other assets. So it’s critical to understand the rules pertaining to the transfer of retirement accounts.
Although these accounts may be transferred outside of the probate process, they can incur state and federal taxes that reduce their value.
Your attorney can help you determine what income or estate taxes may be applied in your case.
You’ll learn the rules related to the required minimum distribution (RMD) and estate tax deductions while creating a sound plan for your family’s financial wellbeing.
How to Plan for Your Retirement Accounts
In estate planning, retirement accounts are handled differently according to many factors. Individual retirement accounts (IRA) can present complex tax issues since they are tax-deferred.
A 401(K) or pension account may have certain restrictions that you and your beneficiaries need to know about.
Your retirement account administrator is an excellent resource for information on the rules related to your defined-contribution plans.
You should have a beneficiary to your retirement accounts named and keep all documents current over time. Contingent beneficiaries can also be named as part of your plan.
This allows children and other individuals to receive your retirement account if your primary beneficiary dies. Consider your overall strategy for your estate plan when naming beneficiaries for your retirement accounts.
Putting Your Retirement Account Estate Plan in Place
Creating a trust is one of the best ways to transfer retirements benefits while protecting them from common financial risks.
Placing an IRA into a trust lets you extend its distributions to beneficiaries over time. But in some cases, there may be time restrictions related to the distribution of its total amount.
Through a trust, you dictate how distributed funds can be used. For example, many people want their retirement accounts to support a loved one’s future education.
This is just one example of the complexities that exist with retirement accounts in estate planning.
Having a skilled and experienced estate planning attorney helps you determine the best choices for your needs.
Beneficiaries should also understand how to avoid tax burdens related to receiving distributions from retirement accounts.
Your attorney will help them understand income tax deductions that help them reduce any financial burden they might face.
You may also want to let assets from your retirement plan to charity. This also protects you from estate and income taxes.
Transferring retirement accounts as part of your estate plan can be overwhelming when you don’t have the legal resources you need.
Understanding the rules related to retirement assets and the ways you can protect their value is a critical part of the process.
Creating the right estate plan ensures that your loved ones get the maximum value from your assets. This provides the financial security they need while helping you leave a lasting legacy.