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Naming Beneficiaries on Your Retirement Plans

We are often asked whether one should name individuals or their Trust as the designated beneficiary on their retirement plans.  There is no one answer to this question.  In other words, it depends!   Here are some considerations when naming beneficiaries on your retirement plans:

Do you and your spouse have different heirs? Naming your spouse, individually, as the beneficiary does not insure that your retirement plan will be passed to your beneficiaries upon your spouse’s death later on.

Do your retirement assets make up a significant part of your estate? If so, then leaving them individually to your beneficiaries may use up your estate tax exemption and reduce the amount available to fund your credit shelter or bypass trust.

How much control do you want to give to your beneficiaries? In naming a beneficiary individually, he will have full control over the assets (and can spend frivolously).

When will your spouse need to take distributions? In naming your spouse individually, you preserve the option for your spouse to “roll-over” the retirement account, and defer distributions (as well as its tax consequences) for a later day.  However, if you name your Trust, your spouse may be required to take distributions immediately after your death (and therefore pay taxes too).

Everyone should review their beneficiary designations frequently to make sure you have made the proper designation.  Work with your estate planning attorney to make sure you have made the proper designation which will accomplish your goals.

Al Davis: Estate Tax Consequence?

This is an interesting article I found about a possible estate tax consequence concerning Al Davis' ownership of the Oakland Raiders. Begin reading below:

Posted on Forbes.com October 8th
Estate Of Al Davis Could Face Huge Tax Bill On Oakland Raiders

The estate of Al Davis could potentially face big inheritance taxes on the Oakland Raiders.

Al Davis, who died today, bought a 10% interest in the Oakland Raiders for $18,500 in 1966 and increased his stake to 67% over the years before selling 20% of the NFL team for $150 million in 2007. The Raiders are currently worth $761 million by our count. The ownership of the team is being left to the late owner’s wife, Carol.

But Davis’ son, Mark, who has been involved in some business aspects of the football team but is not listed in the team’s media guide, is going to run the team and he could be face hundreds of millions of dollars of taxes based on the price appreciation of the Raiders if his mother, Carol, eventually leaves the team to him ... < continue reading at Forbes.com >