It sometimes seems like a minor point to name the beneficiary when people in Georgia are setting up their individual retirement accounts. While individuals may not think it’s important in the moment, failing to name a beneficiary or naming the wrong one is one of the biggest estate planning mistakes a person can make. The reason is that the family of the IRA owner can go through unnecessary stress or face unnecessary costs when there are beneficiary mistakes.

When the owner of an IRA dies without designating a beneficiary, the assets in the IRA are immediately transferred into the person’s estate. In cases where a beneficiary has been properly designated, however, the IRA assets pass outside of probate. Most of the time, people list their spouses as designated beneficiaries on retirement accounts. Indeed, this is required for 401(k)s unless the spouse has made an explicit waiver in writing. With IRAs, it’s up to the owner to make the designation. Setting the spouse as the beneficiary often makes the most sense because the spouse’s tax obligations will be stretched out for a long period.

For people who want to name their children as beneficiaries, steps can be taken to set up inheritance IRAs when the IRA owner dies. It can be more complex in cases where more than one child is involved. They can be named primary or contingent beneficiaries. If the designations are not correctly established and one of the kids dies before the IRA owner, that child’s offspring could be disinherited with regard to the IRA.

People who have questions about estate planning in Georgia might want to speak with a lawyer. A lawyer with experience in probate and estate planning may be able to help by examining the facts of the client’s situation and suggesting legal instruments to meet their goals. A lawyer may also draft a will or trust to effect the transfer of assets.