While it may seem like a minor step, it can be important for those in South Carolina with an IRA to name a beneficiary. Failing to name a beneficiary could result in a lot of stress and lost money for surviving family members. The same could be true if a person fails to update the beneficiary designation. There are many questions that an account holder should ask prior to deciding who will be the beneficiary.
First, it is necessary to consider whether the money will go to a family member or a charity. Those who don't have family members will generally select a charity or some other organization to benefit from proceeds in an IRA. If a person is married, his or her spouse is the most likely person to be the account beneficiary. However, there is no obligation to do so.
One of the benefits of transferring money in an IRA to a surviving spouse is the ability to stretch distributions from the account over a longer period of time. When a spouse receives the proceeds from an IRA, the payments stretch for the rest of his or her life. Furthermore, when another person receives proceeds from an IRA, that individual may need to take automatic distributions. Those distributions may result in paying more taxes over a shorter period of time.
When done correctly, beneficiary designations can help a person meet his or her estate planning goals. An estate planning professional may be able to help create these documents in an affordable and timely manner. An attorney may be able to review any designations that have already been made. Reviewing existing designations is ideal as a person may get divorced, have a child or otherwise need to decide if they are still suitable.