Legacy Planning

The beneficiary form is the most important estate planning document for traditional and Roth IRA’s. This single document ultimately determines the future value of the accounts, who will get the assets and for how long. We recommend you always designate a primary and contingent beneficiary to ensure the most effective and tax* efficient transfer of retirement wealth. You did not work hard to have your wealth depleted by a lack of simple planning.

We want to help you avoid the common mistakes made when planning your legacy strategies. In many cases, wealthy individuals designate their “estate” as the primary or contingent beneficiary of their retirement accounts. Because the heirs are named in a will or estate, the assets should filter down based on the will’s instructions. However, because they are not individually identified as beneficiaries, in some instances, the assets will have to be distributed out of the IRA over a five year period, as opposed to “stretching” out the distributions over the life of the new IRA holder. This could cause a tremendous loss of wealth to taxes*, not to mention an opportunity to keep the assets growing tax* deferred for years, based on the life expectancy of the inherited IRA holder.

Another powerful wealth transfer strategy includes establishing a trust. A trust is simply an agreement by which your assets are managed by one person for the benefit of others. Any type of property can generally be transferred to a trust, including cash, stocks, bonds, a home or other real estate, or an interest in a business. There are several types of trusts that accomplish various objectives depending on your situation.  Since we are not attorneys, we strongly suggest consulting with an estate attorney to get details regarding the use of trusts and how they may or may not benefit you.

Compass Investment Advisors will work with you to confidently navigate through the estate planning process. The key is to identify the appropriate legacy strategy that is most beneficial for you and your family.

*We urge you to please seek the advice of a qualified tax professional when trying to determine how the United States tax code will impact the wealth you and your family have created.