| One thing you may, or may not, have known is that you will be required to name a beneficiary of your retirement account.
When you are trying to decide who you should name as the Beneficiary of your retirement account, there are some tips to keep in mind.
In this article I will give you some ideas of where to start, but please remember that every one is different and there are even different laws from one state to the next, so you need to consult a professional in your state for more exact advice.
One of the most important factors you need to consider are the tax consequences of any choice you make.
Many people will just name their trust as the beneficiary but the problem with that is that whoever is also on the trust will have to pay taxes on the retirement proceeds.
Again, make sure you talk to a professional first to decide the best way to go to avoid as many taxes as you legally can.
Wealth preservation should be your number one consideration.
There is no point in leaving a lot of money to your spouse or children if most of it will be eaten up with taxes.
Find the best alternatives to minimize the tax obligations.
It is also important to note that if you want to name your kids as your beneficiaries they should be over 18.
Minors will not be able to directly control a retirement account so some other provision needs to be made if your kids are still minors.
You may be able to set up a trustee or allow whoever the legal guardian will be for the kids as the person who will have control of the account.
In some states your spouse will automatically be entitled to half of your retirement account.
Check with a local tax attorney to find out for sure if that applies to your state.
You should also get in the habit of revisiting all your legal documents annually. Too many people set up their retirement plans early on and then just forget about them.
It's important you change things as your circumstances and situations change.
One good example of this may be someone who set up a trust for their kids when they were minors.
The trust may have been set up to be handled by a trustee. But, now your kids are grown and you don't want that trustee in place anymore.
That is why it is important to keep up to date with these types of decisions.
You can also choose to leave some, or all, of your retirement account to your favorite charity.
All in all, setting up who you want to leave all your assets to, not just your retirement account, is a very important decision.
Make sure you take some time to sit down with a qualified professional to make the best decisions so your heirs don't end up with nothing after Uncle Sam comes calling.
Figuring out who the beneficiary of your retirement account should be might be an easy decision. Just make sure it is set up the right way.
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