IRAs have become a popular form of retirement account. They offer tax benefits and are also convenient for a person who runs his or her own business. However, there are a few concerns when it comes to estate planning and IRAs. Here are three things you need to protect your retirement account against so your beneficiaries receive their full inheritance.
- Taxes – Sometimes when an IRA account owner dies, the account is liquidated, and the funds are sent as a check to the beneficiary. The problem with this is that accepting that check may subject your beneficiary to paying a ton of taxes, thereby negating any tax benefits you previously received from putting money into the retirement account.
- Divorce – With an IRA, you select a beneficiary. Thus, a divorce will likely mean changing the beneficiary on the account, a fairly simple process but one that is easy to forget. A 401(k) is a little more complicated because it automatically goes to your next of kin. That means if you pass away before the divorce is finalized, your soon-to-be-ex may end up getting the money.
- Creditors – While retirement funds don’t pass the same way a bank account would, it is also very different from a trust. Thus, creditors may have the opportunity to sneak in and get their cut.
Proper Estate Planning to Protect Your IRA, 401(k), and Other Retirement Accounts
To make sure the right person or persons benefit from your hard-earned money, trust the estate planning pros at Petrov Law Firm in San Diego. We offer the premier California estate planning services in the area. Call 619-344-0360 to get started now.Read More