How To Transfer Your Retirement Accounts in Your Estate Plan
An estate plan should address all your personal, family, and business needs and expectations in the best possible way. There are several assets that need to be considered when you are focusing on building a more secure financial future through timely and prudent estate planning.
As part of the plan, you should know what the ways you could transfer your retirement accounts to loved ones. Take all your estate planning goals into account so that none of your wishes gets overlooked. Skilled and knowledgeable estate planning attorneys at Garmo & Garmo have the necessary experience and resources needed for transferring your assets, including retirement accounts, while maximizing their value to benefit your beneficiaries in the long run.
Where to Begin?
Generally, retirement assets transfer directly to the designated beneficiaries without ever going through probate. However, a major downside to this is that the assets are subject to state and federal income tax. They may also be subject to state and federal estate tax.
You should have a fair understanding of required minimum distribution (RMD) rules to help reduce the burden. You should also consider working with a capable attorney for proper planning and utilization of federal estate tax deduction paid on the assets.
You should begin by first identifying your goals. Don’t jump into making changes to or developing an estate plan for retirement asserts. Do you want to support charitable causes or leave the bulk of the assets to your children? It is important that you get familiar with your goals before you attempt to get familiar with the way you want your assets to flow for retirement and onward to your heirs.
You may enjoy an efficient tax result by having your accounts earmarked and titled for passing appropriately. You may be able to secure a successful retirement and transfer your assets to the ultimate recipients. Don’t forget to check beneficiary designations, titling and other documents for aligning your assets in accordance with your plans.
Plan for Excess Capital and Core Assets
Accounts and policies with designated beneficiaries will directly pass to them on your death. It doesn’t matter how you direct the distribution of these policies and accounts in your trust or will. Beneficiary designations mentioned on the retirement account will always take precedence.
If you haven’t yet retired, you should get in touch with your plan administrator or employer’s customer service team for a current listing of all your beneficiary selection for every account. Review these accounts to ensure the beneficiaries are listed the way you want and are all current. This is a particularly important step if you were divorced and remarried.
You would also need to review your income and investments if you are getting ready to retire or have already retired. Your core capital should include enough resources for covering anticipated annual expenses and sufficient reserves for addressing unanticipated expenses, such as long-term care, medical expenses and other episodic payments.
Transferring the Retirement Account into Your Estate Plan
One of the best ways of transferring retirement benefits is creating a trust. You should take all necessary steps to protect them from common financial risks as well. You can extend the distributions to beneficiaries over a period of time by placing your IRA into a trust. However, there may be time restrictions placed on the distribution of the amount.
You can dictate how distributed funds need to be used through a trust. For instance, majority of people want their retirement accounts to support future education expenses of a loved one. There are several complexities that can arise with retirement accounts in estate planning. You can determine the best choices as per your needs by having an experienced and skilled estate planning attorney by your side.
Beneficiaries should have a fair understanding of ways to avoid tax burdens in relation to receiving retirement account distributions. Having a skilled estate planning attorney can be useful to your beneficiaries. The attorney will be able to explain ways to avoid such tax burdens to your beneficiaries. Your attorney will also help the beneficiaries understand income tax deductions related to the retirement accounts. This will help them reduce any financial burden that they may face.
You may want to consider letting assets from your retirement plan go to charity. This can be useful in protecting against income and estate taxes. It is important to understand that transferring retirement accounts can be overwhelming when you don’t have the necessary legal resources.
Understanding the various rules related to retirement assets and ways of protecting their value is a vital part of the process. You can help your loved ones get the maximum value from your assets by creating the right estate plan. This will give them the financial security they require while allowing you to leave a lasting legacy.
Talk to a Qualified Estate Planning Attorney Today
Estate planning goes far beyond drafting a will. It requires accounting for all possible assets and ensuring that they are transferred smoothly to the people and entities that you want should receive them. Working with a leading estate planning law firm, such as Garmo & Garmo, LLP can make the entire process streamlined and beneficial for you in the long run. Get in touch with one of our dedicated attorneys today by calling at 619-441-2500 or complete our online contact form.
