Kathryn T. Joseph & Associates, Inc.

Estate plan approaches for transferring IRA funds

Ohio residents who are planning their estates need to make decisions about how to distribute all of their assets, including individual retirement accounts. These tax-protected savings accounts allow owners to designate beneficiaries. The beneficiary designation on the IRA cannot be overturned by designations in other estate plan documents, like a will. Account holders have multiple options for how to disburse funds after death, and other elements of the estate plan, like a trust, could support the goals of benefactors.

Spouses often inherit IRA funds. Depending on their age, spouse beneficiaries can roll over the assets into a new IRA to continue tax protection. People also have the option to bequeath these leftover retirement funds to children or other loved ones. These beneficiaries have can choose to place the money into an inherited IRA to prevent immediate taxation. If the beneficiary could be a minor upon receiving funds, the will needs to name a custodian to manage the money until the child reaches the age of majority. Using a trust to hold the funds for the child and naming the trust as beneficiary could successfully transfer the assets while maintaining control. Trusts, however, involve administrative costs that need to be considered against the potential benefits.

When people want to grant funds to a charity, they need to coordinate the beneficiary designation with the nonprofit organization. The donation could then make the estate eligible for a charitable deduction.

Any individual in the process of making an estate plan could talk to an attorney. Research by an attorney could inform the person about possible tax consequences for heirs. An attorney might then develop a strategy for limiting taxes. Legal advice could help the person decide whether or not to use trusts to hold and transfer wealth.

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Kathryn T. Joseph & Associates, Inc.
Executive Commons West
29425 Chagrin Blvd.
Suite 305
Cleveland, OH 44122

Toll Free: 888-335-6650
Phone: 216-245-0504
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