Should I Name a Trust as a Retirement Account Beneficiary?

When designating retirement account beneficiaries, it is important to think about your individual estate planning goals. There are disadvantages and advantages to naming a trust as a beneficiary of a retirement account. You can avoid probate, expenses and frustration when naming beneficiaries for qualified retirement plans as these assets pass outside of your probate estate.

Naming a trust as a beneficiary of your retirement plan is most helpful if your beneficiaries cannot be trusted with a significant amount of money, currently have a disability for which they receive government benefits or if those beneficiaries are minors. However, the major disadvantage of naming a trust as a beneficiary is that the assets inside the retirement plan are subject to required minimum distribution payouts based entirely on the oldest beneficiary’s life expectancy. This is not as important if you only have one beneficiary on the trust but if there are multiple heirs with various ages, this can cause significant problems.

Naming individual beneficiaries, however, will allow each of those beneficiaries to take a required minimum distribution based on their individual life expectancy. For more information about estate planning for your IRA and other retirement accounts, set aside a time to speak with an experienced estate planning lawyer in NH.

Learn more about how to create and use trusts within your estate plan by setting up an initial consultation with our law office. We’ll learn more about you, your family, and any other special interests like a business. We’ll use that information to create a comprehensive estate plan for you.


What Does It Mean to Say an Account Is “Transfer on Death?”

A transfer on death designation allows beneficiaries to receive assets at the time an individual passes away rather than waiting for the entire estate to go through probate. This also lets the security or account holder specify the specific percentage of assets that every beneficiary will receive.

This is very helpful for an executor to distribute a person’s assets after the creator passes away. Transfer on death designations only apply to those assets that have a named beneficiary. In order to initiate a transfer on death, a brokerage has to have appropriate documents to verify that those assets can be transferred.

Retirement accounts, such as 401(k)s and IRAs are transfer on death. This means that an unmarried individual can choose anyone as a beneficiary whereas a married person’s spouse may have rights to some or all of a retirement account at the time the spouse passes away.

A surviving spouse generally has more withdrawal opportunities and flexibility than other beneficiaries do. The uniform transfer on death securities registration act governs these transfers. This allows owners to name beneficiaries for bonds, stocks and brokerage accounts which is similar to a payable on death bank account. Each individual brokerage firm would need to have their own paperwork filed for this purpose.

Bear in mind that not all accounts will automatically default to transfer on death. As a result, you need to work with an estate planning lawyer to ensure you’ve covered all your assets in a transfer plan. Tools like a trust and will can help you achieve the right balance for your estate.

Work with our NH and ME estate planning lawyers today.

Three Things to Keep in Mind with Beneficiary Distributions

Do you know who in your life would receive assets from your retirement accounts or a life insurance policy? Have you updated this recently?

Beneficiaries are the people who will receive assets inside your estate or directly receive assets inside other accounts like brokerage accounts or from life insurance policies. There are many different things to keep in mind as you think about who to name as a beneficiary.

The first of these is when and how a beneficiary should receive. In the event that your property will go to your surviving children or other relatives like nieces, nephews or grandchildren, are you comfortable with these beneficiaries receiving all of their assets at age 18 or would you like to delay distribution until later point in time?

A trust is one of the most flexible estate planning tools to help you exert more control and determine when beneficiaries will receive these assets.

Another issue to consider with your beneficiaries is equalizing portions. If you would like to equalize to the extent that you can, lifetime gifts made to beneficiaries, you’ll want to think about how this can be done and still maximize your estate plans. This includes helping loved ones who have big ticket costs such as a wedding or college tuition.

You may wish to build in equalization strategies into tools like a trust to ensure that other beneficiaries who didn’t receive these lifetime gifts are still covered. Finally, think about whether any of your beneficiaries are receiving government tested benefits because they have special needs. This should be incorporated in a unique estate planning strategy handled by a knowledgeable attorney in New Hampshire.



Notebook on desk with the words Estate Planning written. Represents a proactive approach to estate planning.

Why Being Proactive Is Important for Estate & Elder Planning

You know that you need to create an estate and finding a way to craft these documents will not only give you peace of mind but makes things easier for your loved ones. But if you haven’t taken the steps already to put your estate plan into writing, you could be leaving your loved ones to deal with the difficult task of having to wait for the court to process your probated estate.Notebook on desk with the words Estate Planning written. Represents a proactive approach to estate planning.

The court becomes empowered to make decisions on your behalf if you don’t take the proactive step of estate planning. Being proactive in terms of organizing your estate means not waiting until you have been diagnosed with a terminal illness or passed retirement age. The best estate plans are those that are established in early adulthood and revised every five years or each time that a major life event occurs.

A knowledgeable estate planner should be engaged to craft your comprehensive estate plan. An estate planner will look at many different aspects of your personal goals and the strategies and tactics available to you.

They will mesh the goals that you want to achieve, the legacy that you intend to leave behind to your loved ones and charities you wish to support and the steps that are necessary to get there. Scheduling a consultation now with an estate planning attorney assures that if something were to happen to you or if you were to become suddenly incapacitated that there are plans in place to protect your loved ones.

As you approach older ages, you need to think carefully about how you’ll protect your own interests as well as those of your beneficiaries. Our New Hampshire and Maine estate planning law office is here to support you.