Estate Planning In Massachusetts: Can I Name My Minor Child As The Beneficiary For My Retirement Account?

For many people, their retirement savings—401(k), IRA, etc—is amongst their most valuable assets. It is important to consider your retirement accounts when developing an estate plan. You may be wondering: Can I name my minor child as the beneficiary on my retirement account? In Massachusetts, the answer is “yes”—but some unique issues can apply. In this article, our Norwood estate planning attorney explains considerations to be aware of when naming your minor child as the beneficiary of a retirement account in Massachusetts.

Updated Beneficiary Designation are Generally the Best Options for Retirement Accounts 

As a starting point, it is important to emphasize that the best option for handling a retirement account in estate planning—401(k), IRA, Roth IRA, etc—is through updated beneficiary designations. With a designated beneficiary, you can pass assets directly to them. In other words, they will not have to go through the full probate process in order to claim the retirement account. 

You Can Name a Minor as the Beneficiary for a Retirement Account 

You have the right to name your minor child—or any other minor, such as a niece, nephew, or grandchild—as the beneficiary of a retirement account in Massachusetts. However, direct control over the assets by the minor is not allowed until they reach the age of majority. You can designate your minor child as the beneficiary—but the assets will generally need to be managed by a trusted adult/guardian until the child is old enough to take control.

You May Need to Appoint a Conservator to Manage the Account 

If a minor is named as the beneficiary of a retirement account, it may be necessary to appoint a conservator to manage the account until the child reaches adulthood. As a general rule, the best approach is to address this issue as part of your estate plan. An experienced Massachusetts estate planning attorney can help you put the right structure in place to protect your loved ones. 

Mandatory Payout Starts On a Child’s 21st Birthday—and Must Be Completed With a Decade

The Setting Every Community Up for Retirement Enhancement (SECURE) Act is a recently-passed federal law that has important implications for the beneficiaries of retirement accounts, including minors. If a minor is named as a beneficiary of a retirement account, mandatory distributions must begin by the child’s 21st birthday and must be completed within ten years thereafter. In other words, if a child inherits a 401(k) or IRA, he or she must start taking distributions no later than his or her 21st birthday. Further, the entire account must be withdrawn within ten years of the latest initial withdrawal date (his or her 31st birthday).

Speak to Our Norwood, MA Estate Planning Attorney Today

At Fisher Law LLC, our Massachusetts estate planning lawyer is a diligent, reliable advocate for people and families. If you have questions about naming a minor child as a beneficiary, we can help. Contact our estate planning team for your fully confidential initial consultation. With an office in Norwood, we provide estate planning legal services throughout the Boston area.

Source:

congress.gov/bill/116th-congress/house-bill/1994/text