Estate planning involves much more than merely executing a will. You may also want to draft a health care directive, power of attorney or set up an asset protection tool such as a trust.
Reviewing your retirement plan to ensure that you’re comfortable with your beneficiary designations is a critical part of this process.
What happens with retirement accounts during the probate process?
If your retirement account has a valid beneficiary designation, that money will bypass the probate process — which is, ideally, what you probably want to happen.
It can take up to a year for an average probate case to work its way through the legal system. If your retirement account doesn’t have a beneficiary designation, your estate becomes the beneficiary. That means that your heirs may be waiting a very long time to access those funds.
In addition, letting your retirement account go to your estate means that your intended heirs may not see as much of that money as you’d like. They will lose certain rights when it comes to withdrawals that would otherwise shelter them from some of the taxes they might have to pay. Plus, the probate process itself is expensive. The less there is in the estate, the more your heirs will ultimately receive.
Don’t leave your estate plans to chance
Effecting a seamless transfer of wealth from one generation to the next takes knowledge and planning. Instead of trying to sort out everything on your own, consider speaking with an experienced St. Paul attorney about your options. You’re also welcome to continue reviewing our website to learn more.