As Michigan residents get older, the conversations around estate planning and their future might get more complicated. This process gets even more complex if you haven’t updated your estate plan to address new beneficiaries or assets, such as retirement plans.
How to start updating your estate plan
The first step in updating your estate plan is to read through your will and change any inaccurate information. The will is going to be the base-level guide for things like:
- Who should carry out your estate plan
- Instructions for your end-of-life care
- Who gets any major assets or property, like the house
For many families, a will is a great beginning step to estate planning and might meet all of their needs. However, a will is just the first step in passing on your assets.
How to check the beneficiaries on your retirement accounts
Many accounts will have you list a beneficiary. The beneficiary is who will inherit that account or asset after your death.
When you first start an IRA or employer-provided retirement plan, you are asked to designate a beneficiary. Sometimes, people go literal decades without updating the beneficiaries on their retirement accounts. That’s why it’s important to go through all accounts and assets to update beneficiaries and make sure all information is still correct. It’s also important to have this list of accounts and assets to give to your family members after you’ve passed.
What are other options for estate planning and your retirement account?
You have the opportunity to convert your retirement account into a Roth IRA that can be used as an estate planning tool. Roth IRAs don’t have required minimum distributions until they are passed to your beneficiaries.
There are also a lot of additional tax benefits to converting your retirement account into a Roth IRA, such as withdrawals not counting toward the modified adjusted gross income. However, it’s important to look over all of the details of both your retirement plan, estate plan and overall finances before making that conversion.