What Happens to Retirement Assets When a Person Dies?

For many people, retirement accounts represent a significant asset as part of their overall net worth. These accounts often allow for people to name a beneficiary to receive the asset at the time of their death. An advantage of naming a beneficiary of a retirement account is that they typically don’t have to pass through probate.

5 Tips for Retirement Assets Passing to New Owners After a Death:

Well what if your loved one passed away and left behind retirement accounts? The following are five tips as to what you can expect with regard to that asset:

  1. When a person dies, retirement accounts pass automatically to the named beneficiary. This means that they are not included in the probate administration process unless there was no beneficiary named.
  2. In many cases, the beneficiary is the surviving spouse. If the decedent was married at the time of death and named someone other than the spouse as the beneficiary of the retirement account, the surviving spouse may have had to sign a release acknowledging that he or she gave up the right to receive that asset.
  3. The beneficiary, estate administrator, or personal representative may present a copy of the death certificate to the financial institution where the retirement account is held.
  4. Once the financial institution is on notice that the accountholder has died, the next step is to re-register the account into the name of the beneficiary.
  5. The beneficiary of the retirement account is now the owner. He or she may thereafter use the funds as he or she sees fit. In some cases, tax penalties may apply if the funds are withdrawn before a certain time. Beneficiaries should seek assistance from an experienced estate administration attorney and a tax professional before doing anything with these assets.

Unless you have administered estates in the past, you are likely unsure as to how to handle different types of assets after your loved one passes away. Fortunately, we can help walk you through the process. We encourage you to contact us today at (888) 443-6590 for more information.

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Scott Grossman

Scott Grossman

Attorney

The Grossman Law Firm, APC · 525 B Street, Suite 1500, San Diego, CA 92101 · (951) 523-8307
 

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