IRA & Retirement Benefit Planning

Individual Retirement Accounts (IRAs), 401(k)’s, pensions, and other retirement plans are increasingly becoming a larger part of an individual’s asset portfolio.  In the estate planning context, retirement plans are sometimes referred to (along with life insurance) as “non-probate” assets.  This means that, generally, they do not pass to your heirs under the terms of your Will but pass as you have directed to the IRA custodian or retirement plan administrator.  Therefore, it is absolutely vital that the death beneficiary designations that you make with respect to these accounts are correctly worded and appropriately tied in with the rest of your estate planning in order to ensure that the assets held in these accounts pass on to your heirs in accordance with your wishes and in the most efficient and tax-beneficial manner possible.  It is important to remember, that, generally, the assets held in retirement accounts constitute deferred income which has not yet been recognized by you.  Therefore, withdrawals from these accounts by your heirs following your death will generally be taxable income to them.  The flexibility that your heirs will have in determining the timing of their withdrawals from these accounts and their recognition of tax on those withdrawals can be greatly affected by how you have set up the death beneficiary designations on these accounts.

Contact our office for more information on how to properly make these beneficiary designations and plan for the succession of your retirement plans following your death in a manner which corresponds with your wishes regarding your overall estate plan and which provides your heirs with the greatest amount of flexibility possible.