Along with all of your other assets, you must make decisions about who will receive any remaining funds inside your retirement accounts when you pass away. These companies managing your accounts use specific forms for transferring assets, so you need to review these on a regular basis to ensure your wishes are still met with asset transfer. Likewise, you might consider different ways to move those assets.
Think carefully about who you want to receive the assets from any retirement accounts when you pass away. It is certainly simpler to name your spouse directly if you want those assets to transfer to them immediately. However, trusts do have some potential advantages. If your spouse receives these funds directly, they’re eligible to convert these retirement plans to their own IRA, and then use their own schedule to take withdrawals.
With trusts, however, these provide greater protection from creditors than those afforded to retirement funds. Trusts can preserve any funds that are not necessarily required by your spouse for children if you wish to do so. This means that trusts for IRA and 401(k) estate planning are especially helpful if you have a second or subsequent marriage.
Another reason why trusts are beneficial is if your spouse becomes incapacitated at a later age to help safeguard financial assets that could be subject to scams as well as protecting assets that might otherwise be required to spend down for long term care payment qualification. In all of these circumstances, it is beneficial to have an experienced and knowledgeable estate planning attorney to guide you through the process and answer your questions. Your estate plan should be aligned with your individual goals.
Talk to our Pasadena estate planning lawyers today for a more in-depth conversation about your needs.