Estate Planning and Retirement Accounts

Our Idaho Estate Planning Attorneys find that it is very common during an interview with a person or a couple to talk their retirement accounts. Most clients are interested to learn how their accounts will be dispersed after they pass away. It is helpful to bring these things up and to discuss them in the context of preparing a thorough plan so that each person has a good understanding of what is, and what is not, part of their estate planning.

Our Lawyers in Idaho use the experience they have obtained over decades to customize each client’s plan, and to advise our clients, especially when it comes to handling their retirement accounts. Our partners Randy Budge and Lane Erickson, and attorneys Nathan Palmer and Dave Bagley create our award winning Idaho Estate Planning team of Attorneys who can help you. Below is a list of three specific things each person with retirement accounts should understand and consider when it comes to preparing to pass these accounts to others after they have passed.

The first step is to have a clear understanding of what is and what is not included as part of a person’s estate planning. Normally, retirement plans are individually owned. Such accounts or plans come with names such as “IRA”, which is an abbreviation for “Individual Retirement Account”, or 401K, 403(b) or a pension of some sort. These are the most common types of plans that most people have. The most important thing to understand is that these accounts are owned individually. This is true even if a person lives in a community property state.

Because retirement accounts are individually owned, they are property that can be given by that individual to whomever they choose. However, it is important to note that these accounts are essentially third-party contracts. This means that they are administered by a company through a contract that a person signed when they opened the account. As a result, each person’s accounts or pension plan are controlled by the contact they signed and not by that person’s Last Will and Testament.  

One part of the contract that you signed when you opened your retirement account is a beneficiary form. This form is used to name the specific individuals who will receive your account when you pass away. Because these items are controlled by contract, they are not included as part of nor are they controlled by, your estate plan.

Pension plans are also unique. Like other retirement accounts, pension plans are individually owned. However, unlike most other types of these accounts, pension plans are usually not transferrable upon the death of the recipient. In other words, it is common for most pension plans to end with the death of the recipient or their spouse depending on the election for disbursements that was made when payments began.

The next most important thing to know and understand is that even though a retirement account is not part of a person’s estate, that person still has control over who their accounts are distributed to. As mentioned above, a person owning a retirement account has the ability to fill out a beneficiary form naming the individual or individuals who will receive their account upon their death.

The most important thing for a person who owns such an account to understand is that they are in complete control of who their monies are distributed to. At any time the owner of a retirement account can go to their administrator and request that their beneficiary form be changed. The owner of an account can change their form whenever they want and as often as they’d like. This gives them the ability to decide at any given moment who their monies will be given to when they die.

The third thing to understand about retirement accounts is that because the owner is in complete control, they should check the beneficiary forms often. As Estate Planning Attorneys in Idaho we are often amazed by clients who come in to talk with us and find that they have no idea whether they filled out a beneficiary form or not. We always instruct our clients to immediately talk with their account administrator to determine who they listed as beneficiaries. At follow-up meetings our clients often tell us that the form was never filled out, or that it was filled out many years ago and they had no recollection of writing the names that were listed.

Just like life, things are going to change when it comes to a person’s retirement accounts. It is important for each person to review the beneficiary forms regularly to make sure that the individuals that they want to receive their monies when they pass away will actually receive them. This is especially true if a person has gone through a divorce, or a marriage, or when someone close to then has passed away. When any of these things happen or if any other major life change has occurred, it may change who a person lists as their beneficiary. For this reason, we advise our clients to regularly review their Idaho estate plan thoroughly, including their retirement accounts, and make sure that it does what they want.

If you own any type or kind of a retirement accounts or a pension, our Idaho Estate Planning attorneys can help you make sure that your wishes are carried out. 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. You can also email us directly at racine@racinelaw.net. We will answer your questions and will help you solve your Idaho Estate Planning problems.