Our Idaho Falls Estate Planning lawyers meet with each individual client so that their estate plan will be specifically customized for them. This provides an opportunity for us to describe each option that exists. We are also able to help our Idaho Falls Estate Planning clients choose the options that will be best for them. As we meet with our clients we are often asked questions about how retirement accounts are handled after a person dies. We are also often asked whether a client’s written Last Will and Testament will control how retirement accounts are handled.
We take pride in having served our Idaho Falls Estate Planning clients for over 70 years in helping them make good decisions about their estate plans. We are confident that our knowledge and experience can help you customize your plan. Our Idaho Falls team consists of partners Randy Budge and Lane Erickson, and attorneys Nathan Palmer and Dave Bagley. Our team can help you understand and make decisions about your retirement accounts. As you consider how to handle your retirement accounts as part of your plan here are the three main things you should consider.
What is not Included in Your Estate PlanAn estate plan includes most but not all of the “assets” and things that you own. The first thing you need to understand is that your estate plan usually does not include retirement accounts. We find that our clients are surprised to learn this. Most people find it hard to understand that they may own something that is not included as part of their estate.
The two main things that a person may “own” that is not included in their estate are retirement accounts and life insurance policies. There is a good reason why this is so. Take life insurance for an example. Most people understand that when you obtain a life insurance policy you are signing a contract. The agreement is that so long as you make your regular monthly premium payments, the life insurance company has promised in the contract that it will pay the amount of money listed in the contract to whoever you name when you die. This payment is made directly to that individual without having to pass through your estate. The same concept is true of most retirement accounts, including IRAs and 401Ks.
Most kinds of retirement accounts are owned individually. Because an “administrator” handles the retirement account you sign a contract authorizing this relationship. This contract acts very similarly to an insurance contract. The contract for your retirement account has a provision in it that give you the ability to identify and specifically list a beneficiary or person. The terms of the contract state that if you die, the administrator will pay directly to the beneficiary(ies) you list, the monies in the retirement account when you die. As a result of this, your Last Will and Testament has no impact on your retirement accounts. Rather, your retirement accounts are controlled by the contact.
How You can Handle Your Retirement AccountsSo what does this mean from a practical standpoint. It means that the next most important thing for you to know is what you should do with the contract that controls how your retirement accounts will be handled after you die. Through the contract you sign, and that you can change at any time you would like, you get to name the beneficiary(ies) you want to receive the monies in your retirement accounts.
Each contract for a retirement account contains a section that deals with beneficiaries. You get to name the person or the people that you want to receive the monies in your account. You also get to identify what order you want these monies to be paid in. Additionally, you get to describe the percentages of your account that will go to each individual.
The bottom line when it comes to your retirement account is that you are in control. Your retirement accounts belong to you while you are alive and you can change the way your accounts are handled. This includes changing who you name as your beneficiary(ies) at any time. If you change your mind, you can change your beneficiary(ies) as often as you’d like.
How Often You Should Review Your AccountsThis then raises the question of how often you should review your retirement account to see if you need to make a change. It is not uncommon for many of us to have not even looked at who we’ve listed as the beneficiaries on our retirement accounts for decades. All it takes is to schedule a meeting with the administrator of your retirement account so you can review your paperwork, including who you listed as your beneficiary(ies).
The most important time to review your accounts is when you have gone through a major change in your life. This includes a marriage, a divorce, a death of a family member, and the birth of a family member. Additionally, when a good deal of time has gone by, it is always a good idea to review your accounts and see who you have listed as a your beneficiary(ies). Remember, the goal is that you name the person or people that you want to receive your monies when you are gone.
Enlist an Idaho Falls Estate Planning Attorney to Help YouIf you own a retirement accounts or a pension, our Idaho Falls Estate Planning attorneys can help you make sure that your wishes are carried out with these accounts after you die. We are available to discuss your options and answer your questions at an initial consultation. Call us toll free at 877.232.6101 or 208.232.6101 for a consultation with the Racine Olson team of Estate Planning attorneys in Idaho Falls. You can also email us directly at racine@racinelaw.net. We will answer your questions and will help you solve your Idaho Falls Estate Planning problems.