My IRA is Going Where?
J. Sabrina Go & Grayson Chester recently published an article entitled, Unintended Beneficiaries of Retirement Accounts, or: “My IRA is Going Where!?”, Rehrberg Law Group, PLLC, (2020). Provided below is the introduction to the Article.
Throughout your life, you were probably told time and again to save for retirement. Many of you followed this advice. You took advantage of methods blessed by state and federal governments with preferential, qualified tax treatment. You contributed to a 401k plan (if available), or you put money in a Traditional or Roth IRA. If there are any leftover savings in these accounts when you pass, you are able to direct where they should go by way of a beneficiary designation. Like with most areas of estate planning, it is important to keep your beneficiary designations up to date with current goals as well as current laws.1 A failure to update a beneficiary designation can result in disastrous unintended consequences, including unintended beneficiaries. In the wake of the recently-passed Setting Every Community Up for Retirement Enhancement (“SECURE”) Act, it is now more important than ever to make sure that your qualified retirement accounts benefit the people and causes you want—and to prevent unintended beneficiaries from ever profiting off of your success.
There are several ways in which you, as the retirement account owner, could have unintended beneficiaries on your retirement accounts that will be discussed in detail below: (1) You and your spouse have a prenuptial or postnuptial agreement that could conflict with the IRA contract; (2) You did not name a properly-designated contingent beneficiary on your retirement account; (3) You did not name a successor beneficiary to an inherited retirement account; (4) You may be creating a direct line for a creditor to access your beneficiary’s pocket; (5) You named a minor as a beneficiary; or (6) You do not review or update your beneficiary designation
Estate planning is complicated and ever-changing. The best advice? Consult your accountant, attorney, financial planner or insurance representative to get the planning advice you need for your specific situation. Contact us today if you’d like us to point you in the right direction.
Remember: state law often governs these documents. Thus, it is important to get advice from an expert who understands the laws in your area.
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