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Norwood Estate Planning Lawyer > Blog > Estate Planning Attorney > Estate Planning In Massachusetts: What Is The Best Way To Leave An Individual Retirement Account (IRA) To My Heirs?

Estate Planning In Massachusetts: What Is The Best Way To Leave An Individual Retirement Account (IRA) To My Heirs?


Do you have a retirement account? Whether it is an IRA or a Roth IRA, a retirement account is an important asset. It is crucial that you are able to pass on your retirement savings to your beneficiaries in the most effective, efficient manner. What is the right estate planning strategy? Within this article, our Boston estate planning attorneys provide a comprehensive overview of the key things to know about leaving retirement assets to an heir. 

Background: Retirement Accounts Can Avoid Probate 

An Individual Retirement Accounts (IRA) can be a great tool to save money and build wealth. IRAs and Roth IRAs also offer a major benefit for estate planning. They give parties the ability to bypass the traditional probate process. As probate in Massachusetts has the potential to be slow and frustrating, the right to pass down assets outside of probate can be a significant advantage. Direct transfer of a tax-advantaged retirement account is time efficient and, because it occurs outside of probate, the value of which is not disclosed through a public proceeding. 

Review and Update Your Beneficiary Designations 

What is the best way to leave an IRA or a Roth IRA to your heir(s). It is generally by doing so outside of the probate process, using beneficiary designations. Working directly with the financial firm that holds your IRA, you can include beneficiary designations on your account. Doing so effectively allows your IRA to go to your heir(s) through contract law instead of probate when you pass away.

Be sure that your beneficiary designations are accurate and up-to-date. Regularly reviewing and updating beneficiary designations is an important part of estate planning. Life events such as marriages, divorces, births, or deaths can alter your plan for asset distribution. Without up-to-date beneficiary designations, your IRA assets might not be distributed according to your current wishes. 

Understanding the Rules and Regulations for an Inherited IRA 

When an IRA is passed down through a beneficiary designation, the recipient will receive a retirement account—or a portion of a retirement account―that is initially classified as an inherited IRA. Inheriting an IRA in Massachusetts comes with specific rules and regulations. Among other things, you should know that there are required minimum distributions. Indeed. beneficiaries are typically required to take minimum distributions from the inherited IRA.

The amount and timing depend on the beneficiary’s relationship to the original account holder and their age. For example, in Massachusetts, there are many advantages to passing an IRA to a spouse compared to other beneficiaries. An estate planning lawyer can help you determine the most cost-efficient strategy to manage your retirement accounts as part of your broader estate plan. 

Consider Contact Our Boston, MA Estate Planning Lawyer Today

At Fisher Law LLC, our Boston estate planning attorneys help clients find the solution that is the best fit for their specific situation. Have questions about how to handle your retirement account as part of your estate plan? Contact us today for a confidential consultation. We serve communities throughout the Greater Boston area, including Norwood, Westwood, Walpole, and Dedham.

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