You could be unintentionally reducing your family's wealth potential if you do not properly designate the beneficiaries of your IRAs. Improper estate planning could mean that your IRA assets could pass to the wrong people or entities, so how you execute your beneficiary designations is critically important.

Here are some of the steps that need to be taken to name IRA beneficiaries properly:

SPOUSE

A surviving spouse can either roll the funds into his or her existing IRA or establish an inherited IRA and take distributions that will be calculated based on his or her life expectancy.

CHILDREN

Children can be named as beneficiaries of retirement accounts. The law on how and when distributions may or must be taken is not as flexible as it is for surviving spouses. If you have concerns about unlimited distributions being available (and taxed as ordinary income) to a child of any age, there are strategies you can use as part of your overall estate plan to protect your kids and your savings.

TRUSTS

A trust can be named a beneficiary of an inherited IRA, but there are a number of complex issues involved, so be sure to consult with us for guidance.

CONTINGENT BENEFICIARIES

A surviving spouse may wish to disclaim interest in an inherited IRA, so the assets can pass to children or grandchildren. Therefore, it is important to name secondary and primary beneficiaries for your IRA so assets remain within the control of your family.

This article is a service of Jason Johnson, Personal Family Lawyer®. We do not just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That's why we offer a Family Wealth Planning Session™, during which you will get more financially organized than you've ever been before and make all the best choices for the people you love. You can begin by calling our office today at 410-570-1671 to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.