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Preserving Your Retirement Accounts: 3 Compelling Reasons to Avoid Probate

Have you been thinking about creating an estate plan because of your family, your legacy and your desire to preserve your assets, including your retirement accounts? For most adults, the first step is to think about what you own and who should inherit it at the time of your passing. Not many adults want to think about this subject, but it is critical to ensure that our goals for our legacy can be reached. From your spouse and your children to your business and the causes you care about, your Florida estate plan can create a legacy that will far outlive your lifetime.

Fundamentally, your legacy needs to be carefully planned. Be aware that not all estate planning tools operate the same or can achieve the same results. We highly recommend that you work with your Florida and Indiana estate planning attorney. When you work with your experienced estate planning attorney, he will guide you through this process of identifying what you own and the best estate planning tools to use to accomplish your goals. Your estate planning attorney can also help you determine the best way to transfer your hard earned assets to your loved ones at the time of your passing without the need of court involvement, also referred to as the probate process.

In our law firms in Florida and Indiana we have many families that we work with that have significant wealth in retirement accounts. You should know that one of the significant benefits of retirement accounts is their tax benefits. Unfortunately, if they are not devised properly through your estate plan, these benefits can be lost. We want to share three compelling reasons why these accounts should not go to probate with you right here in our blog.

1. Privacy is lost. For most families a retirement account represents a significant amount of wealth.  If future beneficiaries are not named correctly, you could place your retirement account at risk of going through the probate process. This will be a public process and, as a result of the nature of probate, your retirement account will become subject to potential creditors being able to access these funds to pay your valid end of life debts.

2. Access to wealth is lost. Be aware that the probate process is time consuming. One of the main benefits of transferring assets, such as retirement accounts, outside of probate is to make a seamless transition. If the probate process is involved, the probate court will determine when the assets being transferred at death are available which could take at least nine months if not longer.

3. Loss of long-term tax savings can be more beneficial. Your retirement planning comes with significant tax planning strategies. Whether you are planning for deferred taxes for yourself or for future generations, it is important to work with your experienced estate planning attorney to make sure you get all of the tax benefits you can. For example, if you plan for much younger beneficiaries as recipients of your retirement accounts then you may be able to stretch out or defer taxes even longer than with a beneficiary who is at a similar age to you.

Be aware that caution should be taken when you do not name your spouse as your beneficiary. While not necessarily required for your legacy planning, your spouse should be informed if he or she will not be the beneficiary of these funds. You will want to have your spouse’s consent in writing and it may be required under your retirement plan terms. Be sure to discuss this with your Florida and Indiana estate planning attorney to ensure you have covered all the bases for the transfer of this account to someone other than your spouse and will not accidentally end up in the probate court.

We can help use this estate planning tool to reach your goals and understand how important this is to your goals.  We know this article raises more questions that it answers. For more information about this or other planning options and how they might work for you and your family, please call our office to schedule a time to discuss this. Bear in mind, when choosing an attorney, it is important to find a legal professional who specializes in your specific legal needs. As a law firm that serves our clients in three states, we understand the unique challenges that state laws can pose. We are here to help you now, and in the future in the states of Florida and Indiana.