If you’re completing your own estate planning, there’s a chance that an IRA is one of the biggest assets in your estate. When you pass this on to your loved ones, you should always be clear about how this will influence their immediate financial situation.
Previous strategies for stretching out IRA inheritances no longer work, and this means that if you haven’t updated your estate plan strategy in some time that it could be beneficial to speak with a lawyer about your options.
People coming into substantial wealth handed down in individual retirement accounts need to be aware of specific requirements to liquidate these as they apply to IRAs. In the past, many people would spread this over the course of their lifetime, and that benefit was especially high for younger heirs because the assets had many years to grow.
However, that all changed in 2019 with a new law about the way that tax deferred retirement accounts can be passed on. Now, heirs who are not chronically ill, minor children, disabled or those heirs more than 10 years younger than the IRA owner have to empty the account within 10 years of the original owner’s death. This means that when using inherited IRAs as a form of your estate planning transfer plan, you will need to consult with a lawyer about who you select to receive these benefits and the potential financial and tax related challenges that they may face.
For more details on adjusting your own estate plan, contact a lawyer today.