Avoid a “Family Feud” by Naming Beneficiaries in Accordance by bxk16778


									         Avoid a “Family Feud” by Naming Beneficiaries in
                    Accordance with State Law
State laws vary in how IRA assets are treated upon the death of an IRA owner. Several
states have rules on their books to ensure that surviving spouses get a fair portion of the
assets from their deceased spouse’s estate. These rules can supersede any beneficiary
designations you make, and can also create headaches for your loved ones as they
manage your estate after your death.
     For example, in New York and Florida, surviving spouses are entitled to receive an
“elective share” of their deceased spouse’s assets. In Florida, the elective share amount is
30% of the value of the estate, including IRA assets. The payment does not necessarily
have to come from the IRA. However, if IRA assets make up most of the estate, the
surviving spouse may be entitled to assets from the IRA, even if the spouse is not named
as a beneficiary on the account.
     In New York, the law is somewhat different. The elective share that surviving
spouses are entitled to equals one-third of the deceased spouse’s estate, including IRA
assets. However, if beneficiaries were named to an IRA before September 1, 1992, IRA
assets can be excluded from the elective share calculation.
     In a handful of states, assets acquired by a married couple while they are married are
considered “community property.” Upon the death one spouse, the surviving spouse is
entitled to one-half of the couple’s joint assets, even if a will or any beneficiary
designations specify otherwise.
     One outcome you do not want is for the state court to decide how to distribute the
assets in your estate. Make sure that your beneficiary designations are current on all of
your IRA accounts, and keep in mind what share of your estate is required to pass to your
     I can help you review your current beneficiary designations to help you ensure that
they are consistent with your intentions. I can also give you the names of several local
attorneys who are familiar with state IRA beneficiary laws. Complete the enclosed reply
coupon and return it to my office to schedule an appointment.
     Source: Kiplinger’s Retirement Report, October 2004, IRAs and State Laws

To top