Making sure loved ones receive IRA benefits

Posted by Angela Holliday Hansen Esq. | Jan 04, 2014 | 0 Comments

While a will is a very important document that handles how many of an individual's assets will be distributed after their passing, an individual retirement account is not one of those assets. An IRA's distribution is instead governed by a beneficiary designation form filled out the account is originally opened. It is prudent for Maryland residents to periodically check these designations to ensure that they are current.

An IRA's beneficiary can be anyone the account holder designates, regardless of the relationship or who is designated in the owner's will. In contrast, a married owner of a 401(k) or similar employer-sponsored plan must obtain the permission of the spouse to leave it to another beneficiary.

Naming one's own estate as the beneficiary may seem like a reasonable move, to allow it to be distributed with the remainder of the estate. However, doing so can eliminate many of the tax benefits that are gained by investing in a retirement account in the first place. If no beneficiary form is on file, the distribution will be governed by the default policy of the entity that holds the funds. This default beneficiary is most frequently the owner's spouse.

Ensuring that one's property is distributed to those recipients that are intended by the decedent can require diligence and careful planning. There are many types of assets in addition to individual retirement accounts that are governed by beneficiary designations instead of will provisions and that consequently pass outside of the probate process. It is therefore suggested that estate planning documents be periodically reviewed and appropriately updated or revised if changing circumstances so dictate.

About the Author

Angela Holliday Hansen Esq.

Angela Holliday Hansen, Esq., is a former big firm corporate attorney who now practices family law in Rockville Maryland. Ms. Hansen oversees complex estate administration and drafts...

Comments

There are no comments for this post. Be the first and Add your Comment below.

Leave a Comment

Serving the following areas:

Hansen Legal & Mediation Services in Rockville, Maryland, serves Montgomery County and nearby communities of the Washington, D.C., area, including Bethesda, Chevy Chase, Gaithersburg, Silver Spring, Potomac, Germantown, Olney, Burtonsville, Takoma Park, Kensington, Wheaton, Aspen Hill, Clarksburg, North Potomac and Baltimore.

200 A Monroe St
Suite 310

Rockville, MD 20850
301-690-0383
Mon, Tue, Wed, Thu, Fri: 09:00am - 05:00pm
200 A Monroe St
Suite 310

Rockville, MD 20850
301-690-0383
Mon, Tue, Wed, Thu, Fri: 09:00am - 05:00pm

Menu