Should You Share Your IRA Beneficiary Form Information with Your Financial Advisor?

Who needs to know what you’ve included on beneficiary forms? How does this make your estate planning easier or harder? 

An advisor who is not kept in the loop about your IRA decisions can become extremely confused or could even delay the process of your loved ones getting the necessary benefits after you pass away.

A common question asked by financial advisors who haven’t been kept in the loop is: where is the beneficiary form? One of the most valuable services that you can provide as a client of a financial advisor is to explain your decision-making process and provide your financial advisors with information about who you have chosen to be the beneficiary or primary in contingent beneficiary on your IRA.

More in depth planning conversations can be had between you and your financial advisor when he or she is aware of your decisions.

The beneficiary form review is important because as life circumstances change, you may need to update these materials and updating your other estate planning documents without also considering how the IRA beneficiary form can be affected could be a big mistake.

Beneficiaries could be forced to face unnecessary and unfortunate legal, financial and tax obligations. If this person is not clear in advance that they were named as a beneficiary in your IRA, they may struggle to figure out how to distribute these funds if there are no clear instructions, or more legal challenges. This often means expensive and time intensive family and legal disputes that don’t end well and can even rip families apart.

These mistakes can be very easily avoided by verifying that your beneficiary forms are updated accurately when you have told your financial advisor about what these include. Scheduling a consultation with your financial advisor at the same time that you review your estate planning documents with your estate planning lawyer on an annual basis can help to ensure that all of your individual needs have been taken into account.



What Makes IRAs Different from Other Types of Inherited Assets?

Passing on an IRA is different from stipulating another piece of property in your estate planning materials like a will to pass on to someone else if something happens to you. IRAs are managed differently and there are a complex set of regulations involved in this process. IRAs and retirement planning

There are a few different ways that IRAs may surprise you in terms of how they are classified and how they impact your beneficiaries. These include:

  •       IRA beneficiaries may be eligible for particular tax breaks that are often missed.
  •       IRAs are distributed in a different manner than any other asset, both after death and during life.
  •       IRAs cannot be jointly owned or change ownership during the life of a person who manages it.
  •       An IRA may require a unique and separate estate plan.
  •       The investment gains inside an IRA do not always have to be subject to the 3.8% investment income surtax.
  •       An IRA passes on to someone else by contract rather than by a will.

Depending on the estate in question, the IRAs could be subjected to double tax at death; an estate tax and an income tax.

The deductions available to IRA beneficiaries are easy to overlook because it requires the coordination of tax planning between the settling the estate and the IRA beneficiary. It is valuable for both of these entities to work together to identify tax saving opportunities. The distributions from an inherited IRA could be taxable to the beneficiary. However, it is a good idea to explore tax planning opportunities well in advance to avoid this situation, if possible.

Common Retirement Savings Account Has a Big Catch for High Earners


The Roth IRA is one of the most popular accounts that allow people to invest tax-free for their retirement. However, if people earn too much, they will not be eligible to contribute directly to a Roth IRA. But meeting with an experienced financial planner in conjunction with other professionals such as your estate planning attorney may allow you to exercise a backdoor Roth IRA strategy that allows high earners to bypass any income limits. retirement options for high earners

High earning employees who do want in on tax-free investment growth that is offered by the Roth IRA could benefit from the so called backdoor IRA. In the event that a high earning person already has a tax deductible traditional IRA account, this strategy becomes extremely important. This is why it is knowledgeable and valuable to reach out to a financial planner and accountant immediately.

If you have never opened an IRA before, it is simple to do so. You can open a traditional IRA at the brokerage of your choosing, make a contribution to the account, open a Roth IRA at the same brokerage and then convert that amount contributed to the traditional IRA to a Roth IRA.


This leaves your traditional IRA empty and instead moves the money into your Roth IRA. Make sure you talk over your options for estate planning and an appropriate financial planning protection with a knowledgeable estate planning attorney as well as other relevant professionals.

Five Things You Need to Know About Inherited Retirement Accounts

Almost everyone has some type of retirement account, whether it’s a pension, IRA, or 401(k). So, it’s important to plan ahead for your estate purposes. One of the first things to know about a retirement account is that your beneficiaries will most likely owe taxes on the retirement accounts passed down to them. IRAs and future planning

Assets like real estate, non-retirement investment accounts, vehicles and life insurance are not counted as income when they are inherited. However, retirement accounts are classified as income in respect of a decedent. The second thing to know is that not all retirement accounts are treated in a similar fashion. A beneficiary who left behind an employer sponsored plan like a pension or a 401(k) will be subjected to more requirements and limitations than IRAs.

Many people will name their spouse as their primary beneficiary, but the third thing to know about retirement accounts is that it doesn’t provide any level of protection or preservation for the inherited accounts. Make sure that your broader estate planning objectives match the beneficiary designations.

The fourth thing to know about retirement accounts is that there is an increased level of flexibility and protection afforded by passing a retirement account to your beneficiaries via a trust. However, retirement trusts have to be drafted appropriately by an experienced estate planning attorney because of the income tax treatment of inherited retirement accounts. Bear in mind that without significant planning, the funds could be subject to the claim of any beneficiary’s judgment, creditors, or bankruptcy. Consulting with an experienced estate planning attorney is one way to avoid these negative consequences.

Should I Worry About Protecting My IRA?

This past June, an important ruling from the Supreme Court found that an inherited IRA is not protected as retirement funds. If a beneficiary of inherited IRA funds files for bankruptcy, the funds they inherited could be subject to creditor claims.

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This new finding highlights the value of a trust. If the inherited IRA funds were received by a beneficiary though a trust, this would help to protect those funds so that they could be used in the manner desired by the person setting up

the beneficiaries. One such example is the use of a Standalone Retirement Trust, where inherited funds flow to a third-party trust after the retirement plan owner passes away. While the beneficiary still retains access to the funds, the fact that he or she didn’t create the trust allows quite a bit of protection for the beneficiary.

There are some states where laws on the books do protect inherited retirement accounts from creditors, but it’s always wise to consult with an estate planning attorney to discuss best structures for passing down assets. To learn more about your options, send us an email at or contact us via phone at 732-521-9455 to get started.

Supreme Court Decision: Inherited IRA NOT Protected

A recent decision from the Supreme Court means there’s no better time than now to review your estate plans and ensure that you have identified the best possible solution for passing down assets to another generation. This new ruling states that inherited IRA funds DO NOT QUALIFY under the category of “retirement funds” under bankruptcy exemption guidelines. Previously, these kinds of funds might have been considered “bulletproof” from creditors, but this new ruling means it could be time to re-evaluate how you’re transferring your assets down to children and other beneficiaries. Is a Standalone Retirement Trust or IRA Trust right for me?

Supreme Court Decision Inherited IRA NOT Protected
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According to the Supreme Court, the members of which conducted reviews of the Bankruptcy Code to get more specifics on the situation, inherited IRAs should not count as retirement funds because the individual inheriting the assets cannot contribute to the funds or invest more money into them. Since the IRA also requires that the accountholder draw money from the account, the Supreme Court argued that this would “undermine the purpose of the Bankruptcy Code”.

Each client wishing to establish plans for the future transfer of assets to beneficiaries has their own concerns and situations, which is why it’s so critical that you work with a team of experienced planning attorneys to meet your goals and increase the chances that those assets will be protected and meaningful for the beneficiary. To review trusts and other options for asset transfer, email or contact us via phone at 732-521-9455

Your IRA: Top Tips For Passing Down Your IRA To Children

Those who have spent a good amount of time contributing to their IRA might have questions when it’s time to decide beneficiaries. For example, is it best to stretch out the payouts over a lifetime to make the most of tax benefits or to withdraw the entire amount?

Your IRA Top Tips For Passing Down Your IRA To Children
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In many cases, an immediate emptying of the account is not in the best interest of the beneficiary, and it’s also something that parents may want to help their children avoid. Often, it’s difficult to suddenly manage a large sum of money, making Mom and Dad’s IRA benefits run out long before expected. Since many parents want to guard against this where possible, it’s important to note that two different strategies can help to stall an immediate withdrawal of all assets on the death of a parent.

One option is to name a trust as the IRA beneficiary, giving a trustee the power to distribute assets, but you must work with an experienced estate planner who knows how to craft a document that qualifies under IRS rules. Another option to consider is setting up the IRA as a trust account, giving trustee powers to the IRA provider, which is known as a “trusteed IRA”. This option, however, does have some downsides: higher fees and requirements for minimum balances are two of those disadvantages.

Options exist to help you plan for your future and to help beneficiaries receive assets in a somewhat-structured manner. To learn more about these planning tools, call us at 732-521-9455 to get started.

Wisely Select Your IRA Beneficiary

If you have spent your working and pre-retirement years pouring into, rather than having to tap into, your retirement savings, congratulations! You’re on your way to being set up for success. Before kicking back and relaxing, though, it’s worth conducting a review to see how you’ve set up the beneficiary on your IRA. There are possible estate tax and income tax risks for you and your chosen beneficiary.

Wisely Select Your IRA Beneficiary
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For non-Roth retirement accounts, you’ll want to factor in how long the beneficiary will push off distributions, the required minimum distributions, and the possible income tax bracket for that individual. All of these factors ca give you a window into the tax liability for the beneficiary. The majority of the time, RMDs will kick in pretty soon after a retirement plan is inherited. That depends on the oldest beneficiary, however, so the younger your beneficiaries are, the better off they’ll be. With smaller RMDs, there’s better opportunity for them to benefit from tax-deferred growth in the retirement account they are inheriting.

If you list your spouse as the beneficiary, which many people do, bear in mind that this could will increase their own taxable estate (although you’ll be able to transfer to your spouse estate tax free). Any beneficiaries outside your spouse will probably mean that your retirement account is included in your estate. Have you considered Stand Alone Retirement Trust? To learn more about the best planning strategies for your retirement account and asset protection needs, send us an email to or contact us via phone at 732-521-9455 to get started.

Trusteed IRAs to Assist Your Heirs in Managing Their Inheritance

The fear that a person’s adult children will mismanage their inheritance is not uncommon. Luckily, the field of estate planning offers many tools to assist parents in ensuring that this does not happen. As a recent article explains, one of these tools is the trusteed IRA.

A trusteed IRA combines a traditional IRA with the benefits of a trust account. Importantly, the owner of a trusteed IRA can more confidently leave his or her account to his or her heirs, as the trusteed IRA provides a long-term distribution plan for making withdrawals.  Chief fiduciary officer of U.S. Bancorp Sally Mullen explains that “for clients who want to control what happens after their death, this is an interesting and attractive vehicle.”

Before selecting any estate planning device, it is important to understand the risks associated with various devices. A trusteed IRA presents two major risks: (1) the trusteed IRA could end up with a higher tax liability than the heirs would have otherwise been responsible for, and (2) the IRS may determine that the trust is not a “see-through” or “conduit” trust, meaning that his or her heirs would not be able to take the stretched-out withdrawals as planned.

Safeguard Your Wealth for Retirement

It is never too early to start planning for a long and comfortable retirement. A major part of retirement planning is safeguarding assets from the uncertainty that life often brings. A recent article shares some tips for protecting retirement savings from potential liabilities such as lawsuits, while also ensuring that there is money available to you when you need it.  Here are some important takeaways:

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Schedule Your Assets Based on Your Financial Timeline
People often protect their wealth by putting it in investments or policies that they will not be able to access for a number of years. While this is typically a great way to keep assets from creditors, it may become problematic if a person needs access to the money. Therefore, it is wise to schedule your investments and policies so that they become due at various, critical times in your life, such as when your children go to college or when you plan to retire.

Be Risky, Within Reason
Risky maneuvers, such as putting money into the stock market, can often pay off where financial planning is concerned. However, too much risk can lead to disaster as well. In order to safeguard the bulk of your retirement savings, you may consider secured-return investments such as a fixed indexed annuity. Place a much smaller portion into vulnerable investments and securities.

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“It’s For Your Own Good! – Protecting Your IRA For & From Your Children”

One important asset that many people pass on to their beneficiaries is their Individual Retirement Account (“IRA”). For many people, it is important to protect their beneficiaries from immediately draining the IRA. A recent article discusses the new option of a Trusteed IRA, which helps to prevent this outcome.

A relatively new financial product, the Trusteed IRA is offered by several financial firms. Trusteed IRAs are marketed towards affluent investors who might otherwise put their IRA in a trust. Through a Trusteed IRA, the bank becomes trustee over the IRA assets. The bank then works with the beneficiary’s financial advisor in order to manage and distribute the assets.

If you are interested in a Trusteed IRA, be sure to discuss it with your CPA, financial advisor, and estate planning attorney. These members of your professional team should review the plan thoroughly and be comfortable with how the Trusteed IRA will be managed. A carelessly set up Trusteed IRA may impact an individual’s ability to utilize his or her estate tax marital deduction. The marital deduction, which is vital to many high net worth married couples, allows the estate of a deceased spouse to pass, tax free, to the surviving spouse.