Retirement Planning: What does it mean to ... - Estate Planning 123

COORDINATING MY RETIREMENT PLANS AND MY ESTATE PLAN

Your retirement plan is a financial asset; therefore you need to plan for it just like all of your other assets. ?Ideally, your estate plan (including your will, living trust, and financial powers of attorney) is designated to deal with all of your financial assets. ?However, your retirement plan has some unique features that present challenges.

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1. ?Beneficiary Designations. ?Your retirement plan is a contract. ?Upon your death, the IRA trustee or qualified plan custodian is contractually obligated to transfer any remaining funds to your named beneficiary, regardless of any contrary desire you state in your will or living trust. ?For example if the named beneficiary of your IRA is your son, but in your will you leave all your property equally to your son and daughter, your son will receive all of your IRA. ?Under law, the beneficiary designation trumps your will! ?To complicate matters, many wills and living trusts state that all death taxes are paid out of the balance of the remaining will or trust property and are not paid by the beneficiary actually receiving the retirement proceeds. ?Thus in our above example, if federal estate tax was due, both children would equally share in the payment of the death tax on the IRA even though your son received all of the proceeds. ?Again, probably not what you wanted. ?Therefore, you must match (coordinate) your beneficiary designations with your will and any living trust.

Excerpt from The Complete Guide to Estate and Financial Planning in Turbulent Times (Collaborative Press, 2011) - Walt Dallas, Contributing Author

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Source: http://blog.estateplanning123.com/2012/08/retirement-planning-what-does-it-mean-to-coordinate-my-retirement-plans-with-my-estate-plan-pt-1.html

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