Having a will is a great first step to creating a comprehensive estate plan. However, these important documents may not be as effective as intended if Florida individuals do not regularly review and update their contents. More than just going down the list of property already covered by the will, this also includes considering adding new assets and estate planning tools, such as trusts.
Including retirement accounts in an estate plan is not always obvious. After all, most people list a beneficiary to receive the funds should they otherwise be unable to, so why go to the trouble of including it in an estate? Taxes and time are both significant considerations in this matter.
Using trusts to handle the distribution of retirement funds to heirs can be a smart choice. Although it is possible to list an estate as the beneficiary and distribute the funds to heirs from there, it can be a lengthy and costly affair, with taxes eating up much of what they will receive. Trusts offer a more tax-friendly alternative that also gives individuals greater control over the distribution of assets. With a trust, heirs can be limited to regular distributions that prevent them from spending all of their inheritance at once.
Although it is certainly possible to let the beneficiary designation guide the distribution of retirement funds, it may be less effective than other options. Trusts offer Florida individuals a smart and secure process in which they can control their heirs’ inheritances, giving them a steadier and more reliable source of funds rather than a large lump sum. These important estate planning tools also minimize the taxes that might otherwise eat up a sizable portion of the funds.