When it comes to estate planning, there are a wide variety of details to be considered. Fortunately, a qualified Tampa trusts and estates attorney can help sort out the requirements and ensure that your estate planning best reflects your wishes. These may include money, real estate, family heirlooms, child custody, and many other issues such as retirement funds, all of which may be covered in a will or a living trust.
Perhaps surprisingly, retirement funds shouldn’t necessarily pass to your estate as they will trigger the probate of this account. That means the funds in this account will be subject to the oversight of the court system (and the hefty fees of the court system), rather than being passed down directly to your loved ones.
Instead of naming the estate as the beneficiary, it is recommended to name an individual or trust for each retirement account in question. This helps reduce the tax consequences for the person receiving the funds and, more importantly, avoids Florida probate and reduces the stress on your family due to lengthy court processes.
Because retirement accounts are something you invest in long-term, it is not unusual for the original institution holding the account to have been sold, possibly multiple times. This happens with frightening regularity when you leave a retirement account with your previous employer. With each year and each sale, the potential for lost documentation rises, so it is a good idea to either track down and keep a signed beneficiary form or to complete a new one. Your attorney can help you find or recreate this document.
If you wonder why this could be so important, keep this in mind: It is the responsibility of a taxpayer to prove that a beneficiary was actually named. If the original form has been lost, it is of little consequence to the institution, but it can have pretty big implications for the beneficiary. By taking care of this situation now, a host of difficulties and red tape (and potential lost benefits) can be avoided later. Whenever you send in a beneficiary designation form, keep a copy for your records and seek confirmation that the company received your designation.
When retirement plans can be rolled over into an IRA, it is certainly worth considering. You will keep better control of your assets and who is administering them, and you will have more choices for investments, as you are in the driver’s seat and not your employer. Again, a wills and trusts lawyer can help determine the best course of action.
There are different requirements for collecting a retirement account, depending on who the beneficiary is. The age of a spouse, for example, can affect choices made for an IRA, as well as how it is distributed. The age of the IRA owner will also impact the payout choices. The time over which an IRA can be distributed also changes depending upon whether the beneficiary is your spouse, a non-spouse, a trust, or an estate.
If you have questions about how to handle your own retirement account or the options for an inherited one, contact our Tampa wills and trusts attorneys at (813) 438-8503 for guidance and suggestions.