How To Incorporate Retirement Accounts Into Your Estate Plan


Retirement accounts are often very misunderstood. Dealing with how to incorporate them in your estate plan can seem very difficult. Here is some basics, but you really need to speak to a professional about your particular circumstances. 


Don't Title Them Into Your Trust

You have your Trust and now you are working on funding it. Your attorney (or online service) told you to put all of your accounts in the name of your Trust. Hold on, don't do that with your retirement accounts. Retirement accounts are treated differently when it comes to taxes; they are also exempt for most collection actions. If you change the ownership of your retirement accounts that will trigger a tax and you'll loose that collection exemption. If someone tells you to change the name on your retirement accounts...get a second opinion before you do anything.

Primary Beneficiary

If you're married, 9 times out of 10 your should name your spouse as the primary beneficiary. Inheritance of a retirement by a spouse retains the exemption as if they were the original owner of the account. Of course you might be that 1 out of professional advice before you make a final decision.

If you are single, see the contingent beneficary section below.

Contingent Beneficiary

When a non-spouse inherits a retirement account it looses the exemption protections unless you live in a handful of states (Oregon is not one of them). The general best practices it to leave make sure you name each person or organization you want to get part of your retirement account separately - don't name only one person and expect them to share. If you are interested in protecting your retirement accounts from creditors, then there are ways to name a trust to do just that. However, you must name the trust in a specific way and should get the advice of a professional.

If you'd like to learn more about incorporating your retirement accounts into your estate plan, please schedule a complimentary Strategy Session with me

About the Author Donald Rolfe

Father, husband, entrepreneur, and owner of a trivia filled brain. I help families and individuals plan for the unexpected and end of life. Schedule a Complimentary Strategy Session to chat with me, get answers to your questions, and find out about your Estate Plan options.

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