Leaving Your Retirement Plan Assets To Your Heirs

1. If my spouse and I are older, can we choose to pay it as a life estate?
2. Can my spouse and I leave our retirement plan to our heirs?
3. Can my spouse and I leave our retirement plan to charity, or an educational institution?
4. The estate tax exemption is now $5 million. Does this help my heirs for the retirement plan?

If my spouse and I are older, can we choose to pay our retirement plan as a life estate to my spouse?

• suppose you both are age 80, and your spouse has a lot of income from other sources; you may both choose to leave the retirement plan to your spouse payable as a life estate (your spouse gets the income earned by the retirement plan assets), with the principal going to your children and grandchildren when you and your spouse have left this Earth
• it is very important that you and your spouse be in full agreement on this topic; your spouse has to sign a waiver of her rights to the plan under federal law before you can make this effective

Can my spouse and I leave our retirement plan to our heirs?

• If your spouse is fully taken care of, or is deceased, then you can elect to have the beneficiaries of your retirement plan be your children and grandchildren, or anyone else you choose; benefits will be paid out according to your age and the age of the oldest beneficiary; after you pass on, the minimum payments to your beneficiaries can make the plan last for many, many years

Can my spouse and I leave our retirement plan to charity, or an educational institution?

• yes, you can leave your retirement plan to charity, or an educational institution, or any other entity that qualifies for favorable tax treatment
• you need to specify this in the Beneficiary Designation in your retirement plan, or in your will or family trust

The estate tax exemptions are $5 million and $10 million per couple for 2011 and 2012. Does this help my heirs?

• f there is no estate tax on the retirement plan when your children and grandchildren start receiving benefits from the retirement plan, then they will receive all of their distributions without any estate tax; considering that they may receive benefits over a 30 year period or longer, this is an enormously valuable feature of having a specialized retirement plan with well-trained professionals, such as us, who are available for consultation on an on-going basis
• these exemptions may be continued, or may be revised; in any event, you need to keep up and act on a timely basis