Assets and retirement plans, whether they be IRAs, 401(k)s, 403(b) plans or other types of retirement plans, constitute an increasingly large percentage of our clients’ net worth. Although our attorneys do not advise clients on investment strategies, we can advise our client as to the most advantageous ways to structure their plans and beneficiary designations to best achieve their retirement estate planning objectives.

Wills and Trusts do not control disposition of assets in retirement plans. Therefore, if beneficiary designations are not drafted in concert with one’s estate planning documents, then the individuals’ estate planning objectives will not be met. For example, if a minor is named as a beneficiary of a retirement account, he or she will be entitled to complete control over that account at age 18, and a Guardian will have to be appointed to safeguard the minor’s best interest in the meantime. These problems would be solved if a trust is named the beneficiary instead of the minor individually.

Further, if beneficiary designations are not drafted with an understanding of the IRS rules and regulations governing retirement accounts, payments to beneficiaries may have to be accelerated–paid out completely within five years after death. With the proper planning, those payments from a decedent’s retirement plans may be stretched out over the life expectancy of children and grandchildren, thus deferring the imposition of income tax and potentially lowering the applicable income tax rates.

Our attorneys can assist you in avoiding the complexities of the IRS rules and to ensure that your retirement plans are consistent with the remainder of your estate planning and income tax objectives.