Tax benefits for older and younger family members

When you are picking a beneficiary, you have a lot of choices. For many people, the spouse is the clear first choice, since an individual retirement account can simply be transferred into the spouse’s name, making the whole process very seamless. As you will see, though, there are tax benefits to take into account, and they often relate to the age of the person that you choose.

To understand this, you have to think about how long the person is expected to live, as the payouts and tax deferments are tied directly to this. If you choose someone who is 60 years old already, he or she has far fewer years to take advantage of this than if you choose someone who is just five years old. The longer the deferments can last, the more beneficial they are going to be.

For this reason, many people will not give their IRA accounts to their spouses or their children, but to their grandchildren. Other assets can be left for older family members in Texas, while these accounts can be given where they have the biggest impact and where they do the most good — to the younger family members. The older members still benefit in a more immediate way, which helps them the most, while the grandchildren are provided for on a long-term basis that they will appreciate as they grow up.

Do you want to learn more about this entire process or about what you need to do when setting up the transfer of an IRA? If so, you should check out our page on estate plan methods today!