Does my IRA fit into my estate plan?

By November 13, 2017Estate Planning
real estate lawyer near geneva il

Most people associate IRAs with retirement, but if you’ve created an estate plan correctly and worked with an attorney, your IRA can be an asset that fits neatly into your estate plan. However, if you’ve neglected your estate, your IRA could end up going somewhere else or incurring taxes for your beneficiaries.

What does my IRA mean for my estate?

Individual retirement accounts, or IRAs, are the largest investment most people will make in the course of their career. Whether you’re creating a trust, will, or a complete estate plan, you must account for your biggest assets. That includes property, investments, bank accounts, and your IRA. Including your IRA in your estate plan with a clearly designated beneficiary ensures your wishes are executed properly.

What happens if I don’t account for my IRA in my estate plan?

It’s not uncommon for beneficiary forms to be out of date after a major life change. If you’ve gone through a divorce, had a child or a grandchild, or any other major event that would necessitate a change to your beneficiaries, it’s important to have it done correctly and immediately.
We’ve also seen clients name their estate as the beneficiary of their IRA. This is a poor strategy because the funds in your IRA could then pass through the Probate process and incur additional fees and taxes. Proper structuring of your IRA and estate plan can help you avoid more taxes and Probate.

How are IRAs taxed?

Other than choosing beneficiaries and the type of trust you want for them, taxes are the greatest concern when creating an estate plan. If you have a large estate, you may need to get a life insurance policy and life insurance trust to limit the costs of estate taxes for your beneficiaries. If your estate meets certain requirements, it will incur estate taxes and taxes for IRA distribution. Roth IRAs are an exception to income taxes for your beneficiaries, and may offer an answer to tax concerns. It’s best to meet with a financial planner and an attorney to choose the best solution for your estate.

We Can Help

If you aren’t sure how your IRA fits into your estate plan please contact LaCava Law Firm in Geneva, IL by calling (630) 444-7504,or through our inquiry form to schedule a free consultation and get the answers you’re seeking. 


Disclaimer: This blog post is provided by LaCava Law Law, LLC for informational purposes only and should not be construed as legal advice. You should consult with a local attorney regarding your specific situation.

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