You must carefully mind the arrangements you make for the future inheritance of your IRA.
You planned ahead.
You saved money for retirement in an IRA.
And it appears likely that you may yet have money in this account when you die.
According to a recent MarketWatch article “Who gets your IRA when you die? It’s not so simple,” you need to intentionally plan for the passing of your IRA.
This depends on your goals.
Let us say you want to simply divide it between your two children.
You would simply designate each of them as receiving 50 percent.
What if one of them predeceases you?
If you fail to formally update your beneficiaries, the share of the deceased child will pass along in one of two ways.
What are they?
One option is per capita.
This is when the share of the predeceased child passes to the surviving beneficiary, not down the family line to the children of the predeceased child.
Do you really want to disinherit those grandchildren?
You should be aware that per capita tends to be the default approach taken by financial institutions, if you fail to go with the second option.
The option other is per stirpes.
This is when the share of the deceased child will pass to his or her own children.
If you are not sure what the stipulations on your account are, then you should get a copy and find out.
If you need help understanding the terms, you can ask an experienced estate planning attorney.
If these terms do not meet your wishes, you can work with an experienced estate planning attorney to create custom beneficiary designations.
So, how do you find an "experienced" estate planning attorney?
First, ask around. Friends, family and other professional advisors are trustworthy sources.
Second, conduct an "organic" search on "Google" for "estate planning" near you (e.g., "Estate Planning Anytown MoKan").
Third, either way, verify! Check out the education, experience, ratings and client reviews of any attorney before you contact him or her.
In fact, I use both of these services to thoroughly vett attorneys before referring members of our "client" family for legal help in other areas of law or for matters in jurisdictions outside Kansas or Missouri.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.
Reference: MarketWatch (March 17, 2018) “Who gets your IRA when you die? It’s not so simple”