Legal Blog

The Weekly Scenario: Naming Your Estate as Beneficiary of Your IRA

Question: Is naming your estate as beneficiary of your IRA a good idea?

Answer: Generally, the answer is an emphatic no! Once the IRA is paid to your estate, there cannot be a ‘designated’ beneficiary. If there is no designated beneficiary, there is no life expectancy which means the stretch IRA opportunity is lost for the beneficiaries.

If you want to get the stretch payout for the beneficiaries of the IRA, you do not want the IRA to name the estate as beneficiary because the whole idea of stretching is to have a life expectancy payout. An estate is not a person so it cannot have a life expectancy.

Moreover, naming an estate as beneficiary turns an IRA (usually a non- probate asset) into a probate asset.

So, designating your estate as beneficiary of an IRA is a double whammy. You turn a non-probate asset into a probate asset AND your heirs lose the ability to stretch the payments.

 

 

As always, if you have any questions or would like to learn more, please contact Steve Shane at sshane@offitkurman.com or 301.575.0313.

ABOUT STEVE SHANE

Steve Shane Casual Small

sshane@offitkurman.com | 301.575.0313

Steve Shane provides strategic counseling to clients in need of estate administration, charitable giving and business continuity planning while minimizing estate, gift, and generation-skipping transfer tax exposure. He offers legal guidance to clients on asset protection and the proper disposition of assets in accordance with the client’s objectives, while employing tax planning techniques such as the use of irrevocable trusts, life insurance planning, lifetime gifts and charitable trust. He is also experienced with drafting documents for business planning, the incorporation and application for exemption for Private Foundations and the administration of decedents’ estates.

 

ABOUT OFFIT KURMAN

Offit Kurman is one of the fastest-growing, full-service law firms in the Mid-Atlantic region. With over 140 attorneys offering a comprehensive range of services in virtually every legal category, the firm is well positioned to meet the needs of dynamic businesses and the people who own and operate them. Our eleven offices serve individual and corporate clients in the Virginia, Washington, DC, Maryland, Delaware, Pennsylvania, New Jersey, and New York City regions. At Offit Kurman, we are our clients’ most trusted legal advisors, professionals who help maximize and protect business value and personal wealth. In every interaction, we consistently maintain our clients’ confidence by remaining focused on furthering their objectives and achieving their goals in an efficient manner. Trust, knowledge, confidence—in a partner, that’s perfect.

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