A spouse who inherits an IRA has a choice. The surviving spouse can move the account into an inherited IRA to keep the tax shelter. Or she can choose to roll the account into her own IRA.

There are some unique rules that go into effect when an IRA is bequeathed and inherited. If a spouse is inheriting the IRA, they have extra leeway that’s worth putting to good use.

The sorts of things an IRA inheriting spouse ought to think about don’t make the headlines quite as often. However, DailyFinance offered a helpful guide a short time ago in an article titled “When A Spouse Inherits An IRA.”

You see, a spouse has more age-based decisions than a younger inheritor like an adult child. A spouse also has different choices. For instance, a spousal IRA heir can either retitle the account into an inherited IRA or roll it into their own IRA. What to do depends a great deal on the age of the spouse that has passed and the age of the surviving spouse.

After all, age determines when and if you can take distributions, and likewise affects the amount in distributions to take. To roll the IRA into your own means to simply add the balances and treat it like a normal IRA from thereon out, taking distributions based on your own life expectancy when you hit age 70½. On the other hand, if it is kept as an inherited account, you might have to immediately start taking distributions (based upon the RMD of the deceased) if the account had already begun distributions. Indeed, just the difference between one account and two accounts is worthy of consideration.

The original article offers a few examples on the math that comes into play, and there are a few numbers to play with. In the end, you might say the decisions should come down on a few basics. First, the balance between income and savings. This is both a question of how much money do you need and how soon, especially for retirements and medical costs. Also, factor in taxes because traditional IRA distributions are taxable. Second, depending upon the age and needs of the inheriting spouse, you might consider where the IRA is eventually going. Will you need the money in your lifetime or will you also leave it behind? How ought you to structure that?

Reference: DailyFinance (April 22, 2014) “When A Spouse Inherits An IRA”

A properly planned and executed estate plan will have a few key elements and a number of important documents. So how many pieces is your plan all together? It depends upon your own estate. Regardless of your unique estate, it’s helpful to start with a basic list of documents.

There are a great number of little estate planning lists out there, and a dozen ways to list the documents you might need. That noted, MSN Money provided a helpful guide not too long ago with a helpful list of eight titled “Estate-Planning Documents You Need Right Now.”

The eight?

1. Last will and testament
2. Revocable living trust
3. Beneficiary designations
4. Durable power of attorney
5. Health care power of attorney and living will
6. Provision for digital assets
7. Letter of intent
8. List of important documents

Now you might not need all of these elements. In the context of your plans, one or another may be all the more important and so all the more robust. However, these are the basics to consider as you get started.

The original article has more to say concerning each tool and some further resources besides.

Do you have unique goals, unique assets, or a unique family?

It’s very likely there is more to be done with these documents and a few useful tools besides. Whether your plan will be basic or advanced, it pays to ensure that your affairs are in order with the input and guidance of competent counsel.

Reference: MSN Money (April 18, 2014) “Estate-Planning Documents You Need Right Now”

Worried about your adult children blowing through their inheritance? Two strategies can help holders of individual retirement accounts curb an heir’s impulse to “cash out.”

You may have many assets to leave behind for your heirs. However, an IRA is unique enough to be easily squandered in taxes, as MarketWatch noted in a recent article appropriately titled “Protect your heirs from an IRA tax trap.”

IRAs are some of the most common high-value assets. That noted, because they are such unique accounts, there are some equally unique rules regarding inherited IRAs that are either amenable to diligent financial planning or a short-term high of a cash-out.

When an IRA is inherited, the inheritor can elect to take regular distributions (much like the retiree who earned the funds in the first place) that will stretch over the life of the IRA. This can maximize the long-term value of the IRA and minimize the taxation. Alternatively, the inheritor can elect to immediately cash out the IRA and foot the tax bill on the whole sum. This will limit the value of the IRA now and maximize the taxation, limiting growth and the true benefit to the IRA in the first place. Either way, how do you make sure the inheritor will make the right decision?

The original article has some options for you to consider. This is important if your IRA is going to be a large part of the inheritance you leave. Basically, to avoid a disaster that cannot be undone, make sure there is someone there to speak up when needed and to exercise authority over the decision.

You can either name a trust as the beneficiary of the IRA, giving a trustee discretion, or you can actually structure the IRA to be a Trusteed IRA. Each option requires sound legal and financial planning advice, as the rules are some of the most complex in the entire tax code.

How does IRA distribution planning fit into your overall estate plan? Is the IRA the only asset you worry about or is there more to protect? With careful legal structuring, an entire estate plan can work to protect your heirs from themselves.

Reference: MarketWatch (April 28, 2013) “Protect your heirs from an IRA tax trap”

“Young people may be eager to marry for love, but older couples are more practical and worry about paying the bills,” says Pepper Schwartz, professor of sociology at the University of Washington.

These days, more and more Americans are meeting new loves or (finally) their true loves later in life. It has been said that marriage is a young persons’ game, but love isn’t. Even if you leave marriage to the young and idealistic, there is still some planning that really has to be in place.

The sociology of later-in-life marriage is fascinating, both in thinking about the recent jump in numbers and the more recent decrease. Either with or without tying the knot it is also a practical issue with legal ramifications, and for those later-in-life loves not destined for marriage there is some practical advice to be gleaned in a recent article on the subject in The New York Times titled “Welcoming Love at an Older Age, but Not Necessarily Marriage.”

The article has the voice of several experts and more than a few horror stories to share. You see, marriage is an emotional union, but it is also an economic and legal one. This may come far more naturally to 20-somethings than boomers. It seems the older you get the more you have and the more you have to think about.

If you are to marry, then the separate pasts, lives, and families have to account for it all and mesh together, which is a tricky enterprise when everything from college financial aid for children/grandchildren to Medicare or Medicaid benefits may instantly be affected.

To not marry doesn’t necessarily make all of those issues go away, but it might add new ones. For example, how will you legally care for one another and how will you own assets like the home. And of course, there is always the possibility of a split – even this late in life – and the question then of how protected your assets comes to the forefront.

Do take a look at the original article, especially if marriage is not the end-goal, and be sure to structure this new stage in life so that it might also be a happy one.

Reference: The New York Times (April 25, 2014) “Welcoming Love at an Older Age, but Not Necessarily Marriage”

…There are a few important questions many of us don’t think about. They’re the often overlooked issues of estate planning that could make all the difference for your relatives and heirs after you pass.

Estate planning encompasses so many areas of your life. For starters, you’ll likely consider your values and your family. Then there is the nitty-gritty you might be overlooking: the financial, the legal, and the shared understandings. Make time for some real thinking, but also take some time to begin thinking about what you might be overlooking before planning in earnest.

The bits and pieces that are easiest to overlook are the kinds of things best uncovered by some friendly self-interrogation. To help get that conversation started, consider reading a recent article in US News & World Report titled “3 Important Estate Planning Questions.”

These three questions are really only a start, but they are good ones, especially for married couples.

The three?

1. How well does my spouse know our financial advisor?
2. Does my spouse know where all our accounts are located and how to access them?
3. Are our wills and beneficiary designations up-to-date?

If you answer any or all in the negative, then the original article has some easy suggestions. Following through is a natural lead-in to having the right conversations and doing the right things.

At least for this list of questions, the truly important lesson comes down to starting the right conversations with your spouse. Read a bit more in the original piece and further the conversation with competent counsel who can guide you, your spouse and all of your loved ones in building the right plan to both catch all the details and achieve your unique important goals.

Reference: US News & World Report (May 1, 2014) “3 Important Estate Planning Questions”