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Choosing a Beneficiary for Your IRA


The first step in building an estate plan, before you start making wishes, counting your money, or declaring your intentions not to share your prosperity with this or that person is to count your blessings.  You have a family, and you have a retirement account;.  In some ways, it is a win-win situation. What should you do to ensure that your IRA provides the greatest financial protection for your family?  It depends on which problems have the greatest chance of occurring, for example, whether your biggest worry is unpaid debts, family discord, or future obstacles that your children will face after you are gone.  In some cases, it makes sense to name a trust as the beneficiary of your IRA, but in other cases, you can and should stretch your IRA by rolling it over into the IRA of a family member.  To find out more about the various scenarios involving IRA beneficiaries, contact a Dade City estate planning lawyer.

The Benefits of Designating a Trust as an IRA Beneficiary

Establishing a revocable trust can make life less stressful for the beneficiaries of your estate in many ways, not least among them that they can start receiving their inheritance before your estate settles and, in some cases, even while you are still alive.  The following are some scenarios in which it makes sense to designate a trust as the beneficiary of your IRA:

  • You are worried that creditors will try to collect old debts from your estate out of the money in your IRA.  Trusts are a reliable way to protect your assets from creditors.
  • You are worried about inheritance disputes between your current spouse and your children from a previous marriage.  Trusts are a reliable way to keep each beneficiary’s inheritance separate and prevent conflict.
  • The idea of one of your children receiving a lump sum inheritance worries you, because a factor beyond your control, such as your child’s unstable employment, unstable marriage, or ill health makes him or her vulnerable to running out of money after you are gone.

Sometimes It Makes More Sense to Stretch Your IRA to Family Members Instead of Paying It Out to a Trust

Putting your IRA money in a trust is primarily a cautious measure.  If you have nothing to fear, then you can maximize your IRA by rolling it over to a family member.  If you are married, your IRA rolls over to your spouse when you die.  It is also possible to stretch the tax deferral on your IRA not only to your spouse, but also to your children and grandchildren.

Contact a Florida Elder Law Attorney About Retirement Accounts and Your Estate Plan

An estate planning attorney can help you make the best decisions about your IRA.  Contact The Law Office of Laurie R. Chane in Dade City, Florida to discuss your estate plan.



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