An individual retirement account or IRA is an important part of your estate plan. With careful planning, an IRA can ensure you have enough saved up for the future. However, did you know that even a simple mistake can jeopardize your nest-egg?
Whether you are creating a new estate plan, or modifying an existing one, it is in your best interests to consult with an experienced attorney. He or she can quickly assess your situation and help you avoid making the following IRA beneficiary mistakes:
1. No named beneficiary — Unfortunately, many people make the mistake of failing to name a beneficiary to their IRA. Instead, they leave this part of the form blank, or they name their estate. The problem is that by failing to name an actual person as the beneficiary, you limit your heirs’ ability to stretch the IRA after your death and extend the tax deferral provisions allowed by law. Further, the probate court could see your IRA as part of your estate and therefore, available for creditor claims. Also, the IRA assets may be unavailable to beneficiaries until completion of the probate process.
2. Outdated forms — You must review and update your beneficiary form after every major life event. This includes divorce, death of a beneficiary, remarriage, or the birth of a child.
3. Naming a minor as a beneficiary — If you are thinking about naming a minor as the beneficiary to your IRA account, you may want to reconsider. These assets will require a guardianship and then will be available to the beneficiary at the age of majority, eighteen in most states.Instead, talk to an estate planning lawyer about setting up a living trust for the benefit of minors.
4. Creditor Claims — Proper planning will prevent your IRA from exposure to divorce, lawsuits, and creditor events experienced by beneficiaries. An attorney can review your estate plan and help ensure your loved ones enjoy their inheritance for years to come.
5. Loss of Stretch IRA — Stretching the IRA payments over your beneficiary’s lifetime can significantly increase their inheritance and reduce unnecessary exposure to income taxes. An experienced Florida estate planning lawyer can help you set up the right trust for your family.
A solid estate plan can protect your family’s future and give you peace of mind. The right legal professional can ensure you avoid costly mistakes.
Contact a skilled estate planning lawyer in Florida
The Law Offices of Hoyt & Bryan provides clients with dedicated estate planning counsel for wills, trusts, estates, and elder law. For more information about trusts in Central Florida, call (407) 977-8080 today, or contact us online to speak with an experienced estate planning attorney.