Entrust Learning Center > 1. Self-Directed IRA Basics > Who Will Inherit My IRA?

Who Will Inherit My IRA?

Don't leave unfinished business for your family after you pass away. It's very important to update your beneficiary designation, even in your retirement plan.

By: Dave Owens, CPA, CES

July IRA Insights

You may not be too concerned about who inherits your retirement account after you are gone, but it’s probably very important to your heirs and could help make their lives much easier. For most investors, changing or updating beneficiaries on an IRA account is not high on the priority list, but it’s extremely important.

An IRA beneficiary can be a specific person, persons, or entity (like a charity) that is designated on the IRA application to inherit your IRA after you pass away. Most retirement plans, like IRAs, allow multiple beneficiaries. While usually not intentional, not naming a beneficiary can cause complications for any estate.

Most people think that if you name a beneficiary in your Will you are covered, but this is not necessarily the case for certain retirement plans. A beneficiary named on a life insurance policy or an IRA will typically trump a Will. A trust beneficiary also does not supersede a direct beneficiary on an IRA, so be careful and be consistent.

When is the best time to update your beneficiary designation? Several life events can cause you to review your beneficiaries. Such events include divorce, marriage/remarriage, birth of child, or death of a current beneficiary. A good rule of thumb is to sit down with a spouse or financial advisor right after the first of the year and review your portfolio and Wills.

You may have heard the statistic that the average American spends more time planning their annual vacation than they do planning retirement. Your retirement plan is one place you do not want to make a mistake and leave unfinished business behind for a grieving family, due to a small oversight.

 Dave Owens, CPA, CES is the Managing Member of Entrust Freedom, LLC.   Dave and his staff have been in business since 1997. Feel free to contact Dave for more information, or if you have questions, at (239) 333-1031 or owens66@entrustfreedom.com. You can also log on to www.entrustfreedom.com.

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