Santa Paula, CA asked in Estate Planning for California

Q: Should I make my revocable living trust the beneficiary of my 401k? Or should I roll over my 401k in to my wife's IRA

The above question relates to my passing away.

Related Topics:
1 Lawyer Answer
James L. Arrasmith
PREMIUM
James L. Arrasmith pro label Lawyers, want to be a Justia Connect Pro too? Learn more ›
Answered

A: In considering whether to make your revocable living trust the beneficiary of your 401k, or rolling it over into your wife's IRA, it's important to weigh the implications of each option. Designating a trust as a beneficiary can provide control over the distribution of assets and may be beneficial if you have specific wishes for how these funds should be used after your passing. However, trusts as beneficiaries of retirement accounts can have complex tax implications.

Rolling over your 401k into your wife's IRA upon your passing is another option. This can be a simpler process and might offer more favorable tax treatment, as Individual Retirement Accounts (IRAs) have specific rules that can be beneficial for surviving spouses. Your wife would have the option to treat the IRA as her own, which could provide more flexibility in managing the account.

Each option has unique benefits and potential drawbacks. It's important to consider factors like the age of your beneficiaries, their financial knowledge and stability, and the size of the retirement account. Additionally, the tax consequences for each option can vary greatly.

Given the complexities involved, it's advisable to consult with an attorney or a financial advisor. They can help you understand how each choice aligns with your overall estate planning goals and the specific needs of your family. Remember, estate planning is a personal process, and the right choice depends on your individual circumstances.

Nina Whitehurst agrees with this answer

Justia Ask a Lawyer is a forum for consumers to get answers to basic legal questions. Any information sent through Justia Ask a Lawyer is not secure and is done so on a non-confidential basis only.

The use of this website to ask questions or receive answers does not create an attorney–client relationship between you and Justia, or between you and any attorney who receives your information or responds to your questions, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask a Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.

Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.