As the Baby Boomers progress into retirement age, more people within that generation are considering how to manage their IRA in their estate administration plans. IRAs are among the most difficult assets for everyday investors to manage. Tax experts say that a few simple steps can help Florida residents craft an excellent estate plan for their IRA and other assets.

First, remember to always update your beneficiary forms after a major life event. This could include a first marriage, divorce or remarriage. You may also want to change your beneficiary forms after having children, for example. Ultimately, your beneficiary forms will override any provisions in your will, so providing accurate information will make your heirs’ lives much easier.

People who choose to name their estate as their beneficiary by failing to file the proper forms will deprive their heirs of potential financial growth opportunities. By failing to name a beneficiary, you could force your heirs to pay out an accelerated income tax structure, which would prevent them from “stretching out” the distribution of the assets in the IRA. These negative tax consequences could be circumvented simply by properly naming heirs in your will and on beneficiary forms.

Furthermore, many people make the mistake of omitting financial controls from their IRA in the event of their deaths. For example, your child could inherit your IRA, and without any financial restrictions, purchase anything from a college education to a monster truck. By including appropriate guidelines for the money’s distribution, you can ensure that your heirs get the money they deserve on the timeline you specify.

Finally, make sure that you name appropriate financial guardians for your minor children if you name them as beneficiaries. For many people, an ex-spouse could end up overseeing the IRA funds if another guardian is not named. You need to find a trustworthy guardian to protect your child’s future in your will and beneficiary forms.

Follow these few simple ideas to ensure that your beneficiaries receive a properly structured inheritance.

Luis E. Barreto