Your IRA & Estate Planning

IRA’s are often our clients most substantial assets in their estate. However, when we write a will or basic trust for a client, they understand that their IRA does NOT get distributed through the will or trust. 

Instead, the IRA has a beneficiary designation attached to it, that you complete when you open the account. A lot of folks forget to keep their beneficiary designation forms (BDFs) updated. Our firm assists clients in making sure that the BDFs are updated on a regular basis. 

The bottom line is, your will or basic trust has nothing to do with your IRA. Your children or grandchildren (or whoever you have specified as a beneficiary) will receive the IRA distribution outright, or all at once. It’s their choice whether to leave those assets in the IRA and withdraw only the minimum required distributions (depending on how young the beneficiary is, the more or less they have to withdraw). A careless beneficiary could take the IRA and spend it all down at once, losing the huge growth potential of the asset.

However, there are better options that we have available at our firm. We can create a special retirement trust that ensures that the IRA does not get spent down all at once, and also protects the IRA from creditors, bankruptcy, divorce, etc.

If you are interested in learning whether this would make sense for you, please schedule a complimentary appointment by calling (215) 706-0200.