When Planning, Don’t Forget About Retirement Accounts

When crafting an estate plan, many people fail to pay adequate attention to how to best handle what is often their largest asset, their retirement accounts. This lack of attention can often lead to problems such as heirs needing to pay higher estate and income taxes. A recent article discusses steps to take in order to plan for your retirement account.

The first step of estate planning where retirement accounts are concerned is naming a beneficiary on your retirement account. Importantly, revisit this beneficiary designation often, and update it as necessary. For some, estate planning for retirement accounts ends here. For others, it may be necessary to also create a trust to hold the assets from the retirement account in.

For example, there are many reasons why a person wouldn’t want his or her beneficiary to take all of the assets in his or her retirement account immediately. The beneficiaries may be minors, or they may be adults who are not good with money. In these situations, a regular or spendthrift trust may be the best way to distribute the money in the retirement account.

If you decide to set up a trust, however, be sure that you name the trust as the beneficiary for the retirement account, rather than your beneficiaries. People commonly make the mistake of setting up trusts, then naming their children as the beneficiaries on their retirement accounts.

For expert assistance in planning for your retirement account, contact us at (626) 696-3145.

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