You Can’t Take it With You: But You Can Decide Where it Goes
By Alisha Bennett
“Nothing is a matter of life and death except life and death” – Angela Carter
Perhaps it’s not a cheery topic but the fact is that I often deal with clients who have recently inherited an IRA or are trying to plan how to pass on their retirement savings to the next generation.
The most heartbreaking are those who contact us (often having setup an account elsewhere) that are trying to move forward with an inherited IRA-LLC. Many of these people were not listed as successors to the LLC and therefore have to endure a protracted process through the Custodian and the bank in order to access the funds and assets of the LLC. This is why we strongly suggest you list a Successor Manager in your Operating Agreement. Whoever deals with your finances after you are gone will also be struggling emotionally; naming them as Successor Manager bypasses some much headache and makes a difficult process easier. This is especially recommended if you have property or other investments that would suffer from a months long delay in transactional ability.
However, there is one area that is often overlooked by clients: the IRA beneficiary. An IRA beneficiary inherits the IRA and therefore all of the IRA’s assets, including the LLC. A Successor Manager and an IRA Beneficiary may or may not be the same person, depending on your preference.
Most clients assume that if their desired IRA beneficiary changes over the years they don’t have to update the information with the Custodian; they can simply update their will and that will flow down to everything else… unfortunately this is not true.