Contrary to what some people think, retirement accounts are not included in wills.
A story in the New York Times points out that who gets the money invested in a retirement account such as an IRA depends on who is named on the account’s beneficiary form.
Many people make mistakes when it comes to retirement accounts.
They may fail to name a beneficiary, or the form may not be on file with the money manager of the account (the custodian.)
Either mistake can cause problems when it comes to distributing the money. For example, the money could go to the person’s estate and be subject to creditors or to someone you don’t want to see get the money.
If you name your estate as the beneficiary, other problems may ensue. For example, the distributions also may not be stretched out over time.
IRA rules to live by:
- Name a beneficiary
- Name an alternate
- Don’t name your estate
- Review the forms on a regular basis
- Make sure your financial institution has the form and any updated forms.
If you have questions about estate planning, feel free to call us for a consultation at (626) 696-3145.
