The Battle Over Retirement Accounts
Do you have a will, a trust, and retirement accounts? Who
will get your retirement assets? Let’s say that your will says that everything
goes to your spouse, your trust says that everything goes to your children, and
the beneficiary form for your IRA says
that everything goes to your spouse and
your children equally. Who gets your IRA?
It will go to your spouse and your children equally.
IRAs pass to beneficiaries through the beneficiary form.
They don't pass by way of your will unless you name your estate as your
beneficiary or sometimes, in what should never be the case, if you fail to name
any beneficiaries at all. They also never get to your trust unless you name
your trust as your beneficiary. You could have the best trust in the world in
place to receive distributions from your IRA after your death, but if you don’t
file a beneficiary form naming that trust as your beneficiary, it will never
see any IRA distributions.
Whenever there are changes in your family situation, you
need to think about whether your beneficiary forms need to be updated. This is
especially true after a divorce or a remarriage. If you do not want retirement
benefits going to an ex-spouse, then you probably have to update your
beneficiary forms. If retirement benefits are meant to go to children and not
to a newly married spouse, then you may need to have the new spouse sign a
waiver of his or her rights to your retirement benefits. Without a waiver, the
benefits might go automatically to your new spouse, cutting out your children.
This is almost always true for employer plan benefits.
When there is no beneficiary form on file, you are really
taking your chances. Now your retirement assets will go to whoever the company
has named for you in the default language in the documents for the account. It
could be a spouse; it could be your estate.
Do your loved ones a favor and make sure your retirement
assets are going to the right person – the one you planned on receiving the
benefits. Check those beneficiary forms.
What to learn more?
America’s Tax Solutions™ offers an incredible 2 day program
called the IRA Summit to help tax professional fully understand the world of
IRAs and 401k(s) and their role when it comes to helping clients correctly
distributing these assets.
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