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Including an IRA in an estate plan

On Behalf of | Jul 25, 2019 | Estate Planning

Many Ohio residents have invested a significant amount in their Individual Retirement Accounts over the years. These kinds of accounts allow people to save for retirement while taking advantage of tax benefits. Some people end up saving so much that their IRA funds outlive them.

Estate owners often want to simply give their IRA funds to their spouses after they pass away. Indeed, many people set up their IRAs to support retirement for both members of a marriage, even if the account was held in one person’s name only.

Someone who wants to pass an IRA balance to their spouse after they die should name their spouse as the beneficiary. Like other types of investment funds, bank accounts or life insurance policies, IRA account holders can add a beneficiary to whom the account is payable on death. If a spouse is the beneficiary, they can rollover the IRA into their own account without an additional tax penalty. However, non-married account owners may have other plans, such as passing the funds on to support their children or grandchildren.

Someone can pass on an IRA directly; although, there may be different types of tax consequences to the recipient. Another option is to name a trust as the IRA’s beneficiary. Trusts are a popular estate planning option because they allow the creator to have greater control over the use of their assets in the future.

Trusts can be an important part of setting up a gift to children, people with special needs and others in a range of circumstances. An estate planning attorney can help a client develop a will and trusts as part of a comprehensive estate plan.


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