On behalf of Law Offices of Frye, Fortich & Garcia, P.L. | September 19, 2023 | Estate Planning
Do not overlook your IRA in the estate planning process
It is never too early to create your estate plan to protect and provide for your loved ones. Wills, trusts, and other legal tools enable you to make your wishes known regarding the distribution of property to your heirs. However, it is also important to understand how your Individual Retirement Account (also known as IRA) works in connection with your estate plan.
When your IRA was created, you received forms asking you to name beneficiaries. If you have had your IRA for quite some time, then you may want to review those forms to confirm the names you wrote on them.
This is important because the designated beneficiary of an IRA supersedes beneficiaries named in a will or trust. While you may have designated a new spouse or child to be the recipient of your estate under your Will or Trust, the funds of an IRA may not go to that person if they are not the named beneficiary on the IRA. Instead, the funds would go If you have not named a beneficiary for the IRA, Instead, the funds would go to the person listed on your beneficiary form. If you have not named a beneficiary for the IRA, it will be subject to probate and to possible creditor claims prior to distribution to the beneficiaries of your estate. If you have more than one beneficiary for the account, then you should indicate on the form how much each beneficiary should receive if the distribution is not going to be in equal amounts to each beneficiary.
