With many estates today consisting of substantial retirement accounts it is now more important than ever to make sure that your retirement accounts are working properly with your estate plan.  This can be one of the most difficult and confusing areas of the law and it is important that you have good sound advice on how the retirement accounts work in conjunction with your estate plan. The downside to not having good advice can result in a decimation of a life time savings in your retirement account, to the tune of potentially 75%-80% lost in taxes.

One way in New Mexico and Arizona to substantially save your retirement accounts from the taxman is to do a ROTH IRA conversion. With the likelihood that tax rates will only be increasing in the coming years, it may be a good idea to convert your traditional IRA’s to a ROTH in a more favorable tax year, like this year. The benefit of doing the conversion is that after the conversion has occurred, the growth in the IRA is now tax free.  This requires complex analysis of your financial situation.  You should have your CPA, estate planning attorney and financial advisor involved in this decision to determine if a ROTH IRA conversion is the best tax savings plan for you.

In making sure that your retirement accounts are set up properly with your estate planning documents, it is imperative that your estate planning attorney is aware of who the beneficiaries of your retirement accounts are.  You need to make sure that if you have a trust, your trust can work with and handle the retirement accounts in a tax efficient manner.  If your trust is not set up properly it can cause terrible disadvantages for your beneficiaries.  It may be a good idea, if you have a large enough IRA, to have a stand alone IRA Trust that exclusively deals with the IRA.  By doing this we can ensure that the IRA is able to be stretched out over each of your individual beneficiary’s life expectancies and mitigate the taxes that are owed.  This will also ensure greater asset protection of the IRA when it is passed on to your beneficiary’s.

There are many things to consider when looking at your retirement accounts and your estate plan- are you getting the kind of growth you should be getting out of your retirement accounts? Is your retirement account set up properly to ensure maximum growth for you and maximum protection for your heirs? Are your beneficiary’s set up properly on your retirement accounts and how does that affect your estate plan? Is there a more favorable way to deal with your retirement accounts in order to protect 75%-80% of it from going to the IRS? Is your estate plan set up properly to handle your retirement accounts? Does your plan holder have a power of attorney on file for you so that, should you become incapacitated, your agent can manage those retirement accounts? These are all questions that need to be looked at and addressed when dealing with any retirement account.

The attorneys at the law firm of Morris Hall would be happy to sit down with you to review your estate plan and make sure that your retirement accounts are working properly within the confines of your estate planning documents. Please call 888.222.1328 for a free consultation where one of our attorneys will review your estate plan.

dave-eastmanContributed by MH Arrowhead and Scottsdale attorney and partner David T. Eastman

Why Choose Morris Hall:
You have a number of options when it comes to estate planning, so why pick Morris Hall?  First off, estate planning and asset protection are a very complicated endeavor and you should only trust someone who focuses exclusively on those matters.  Also, MH is a proud member of The American Academy of Estate Planning Attorneys (AAEPA) which provides us additional support, advanced training, tools and information that is not available to others – which means that we can better protect your assets and your loved ones.  We are one of only two firms in Arizona that belong to the AAEPA and are the only firm in New Mexico that has been granted membership.  If you have assets and loved ones that you want to protect, you are in good hands with MH.  Contact us today at 888.222.1328 to schedule an appointment!

This blog should be used for informational purposes only.  It does not create an attorney-client relationship with any reader and should not be construed as legal advice.  If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.

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