Turning your IRA into a family fortune is as simple as leaving your assets
to an IRA trust. According to an
article by The Street, an estate planning attorney often helps families minimize
taxes while maximizing benefits for the future. Experts point out that
how your IRA money is handled after your death determines whether you
leave a lasting legacy or whether the hard-earned money is lost to frivolous
behaviors and taxes. Of course, if you are married, it's important
to discuss with your spouse issues regarding estate planning. But if both
spouses share the same goals for their descendants, an IRA trust is an
Reducing the tax liability
If you leave your IRA to your children or grandchildren, they receive the
money as well as a 1099R form for filing taxes. On an inheritance of $100,000,
a beneficiary could owe $35,000 in taxes depending on his or her tax bracket.
Instead, think about placing the IRA in a Beneficiary IRA. In that case,
the beneficiary only takes out the required minimum distributions.
Avoiding costly estate planning mistakes
According to an
article by forbes.com, retirement accounts are notorious for causing costly estate
planning faux pas. It's a common myth that retirement accounts are
covered by a will. In actuality, funds pass to inheritors according to
a beneficiary designation form. Talk to an estate planning attorney about
whether to name family, friends, a trust or a charity as the beneficiary.
If you want to change a beneficiary, it's as simple as filing an amended
form. You can also name primary and contingent beneficiaries.
To preserve the assets for children and grandchildren, the best option
is to leave the retirement assets in a trust. If the intended beneficiaries
are under the age of 21, it keeps the money out of the hands of creditors
and limits the cash flow to heirs. Also, the trust forces your loved ones
to stretch-out the money over time. At the Law Offices of James C. Shields,
we help people with their estate planning questions. We can also help
with issues related to probate, living trusts, power of attorney and living
wills. For more information about leaving your assets to an IRA trust, please