Wealth Transfer Planning: Are Your Beneficiaries Up-to-Date?

July 11, 2019
By Millennium Trust
Share: 

When you first set up your retirement account(s), you designated one or more beneficiaries on the account. Because setting up an account is a ‘one-time thing’, it’s probably unlikely that you’ve thought about it since. But, ensuring that a potential wealth transfer from your retirement account is set up correctly can make things easier for you and those closest to you.

The Importance of Updated Beneficiaries

So, why should you check up on your beneficiaries?  Maybe your current beneficiary is no longer the appropriate person – especially if you’ve experienced any life changes since setting up the account, such as having kids, getting divorced or remarrying. Your beneficiary could also be a charity or trust that no longer exists.

When it comes to wealth transfer, it’s important that who you want to receive your money receives it – and with no hassle. By having the correct beneficiaries on your retirement accounts, you can avoid probate, the court procedure of settling the estate of a deceased person, which can be time consuming and expensive. And, you’ll feel confident that your funds will end up where they should.

What You Need to Know

For an IRA, a spouse can treat it as their own by rolling the assets into their own IRA within 60 days. If they don’t roll the assets into their IRA, they have the option to transfer the assets to an Inherited IRA, where the required minimum distribution (RMD) options can be found on the IRS’s “Required Minimum Distributions for IRA Beneficiaries” webpage and differ depending on a number of factors. 

If the beneficiary is a non-spouse, they cannot treat it as their own IRA and must follow a different set of RMD guidelines from the IRS. Typically, non-spouse beneficiaries must begin taking the RMD by December 31 of the year after death. Any beneficiary can take a lump sum.

Keep in mind, state laws can require written spousal consent if the IRA owner designates anyone other than, or in addition to, their spouse. You can have as many beneficiaries as you want on the account – primary and contingent.

Consider consulting with your legal or financial advisor to help you in your beneficiary decisions.

To update your beneficiaries on a Millennium Trust account, fill out a Beneficiary Designation Form.

The material in this blog is presented for informational purposes only. Millennium Trust Company performs the duties of a directed custodian, and as such does not sell investments or provide investment, legal or tax advice.

Please select at least 1 category *