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IRA Legacy Planning & Protecting Your Life Savings

If you don’t anticipate needing all of your Individual Retirement Account (IRA) money in retirement, you may wish to consider a legacy planning strategy to reduce taxes and increase the assets your loved ones or charities will inherit upon your death.

With proper planning, a modest IRA inheritance could become a supplementary source of income for your beneficiaries as well as a significant legacy for future generations. But planning an IRA Legacy is not easy and involves a complex set of tax issues and distribution rules that must be followed. Any errors could cost you and your beneficiaries as much as 80% of your retirement savings to excess, unnecessary taxes and costly penalties.

At the Law Office of Eric P. Zine, we will explore an IRA Legacy Planning strategy that helps ensure all aspects of your IRA are in order and properly incorporated into your estate plan.

Our IRA Legacy Planning objectives will include:

  • Increasing the longevity and tax-deferred growth potential of your retirement savings
  • Minimizing taxes on the distribution and transfer of your retirement savings during your lifetime and at death
  • Helping you provide meaningful, long-lasting legacies for your loved ones and favorite charities
  • Ensuring the “Stretch IRA” wealth transfer method
  • Helping you and your beneficiaries avoid common, critical mistakes and oversights that often result in excess, unnecessary taxes or (in the worst case scenario) the inadvertent liquidation of your IRA
  • Educating your beneficiaries on how to properly and effectively inherit and handle their inherited IRAs and qualified plans
  • Communicating to your beneficiaries your specific instructions for how you would like them to handle their inherited wealth as well as your hopes for how their inheritance will enhance their lives

In addition, we will consider the following advanced strategies, where appropriate:

  • Trust strategies designed to spread out the distribution and minimize the tax burden on your children
  • Multigenerational IRA Planning trust strategies designed set aside funds for your grandchildren or future generations (avoiding any gift or tax implications at your children’s generation)
  • Trust strategies to protect the IRA assets from unintended consequences associated with the beneficiaries that include:

Protections from divorces, creditors, poor investment management or inability to manage assets, and poor spending (i.e. spendthrift protections).

Shielding the assets from certain beneficiaries, so they can qualify for potential needs-based government benefits (i.e. Medicaid nursing care benefits or supplemental disability income)

Planning an IRA Legacy Strategy requires extensive knowledge of the basic IRA inheritance rules and their interplay on your estate planning and tax planning options. Generally, it’s most advantageous to explore an inheritance strategy early—before you take distributions from the IRA—when there are many more planning options and much greater flexibility.

To learn more about IRA Legacy Strategies and Protecting your IRA, or any other aspect of Estate Planning or Elder Law, call Attorney Zine at 781.930.3003 or e-mail us to schedule a free consultation.