Does my Roth IRA go through probate? Many people dont understand which of their assets go through the probate process. Its important to fully understand how your assets are transferred so that youre able to make things happen the way you want them to happen. Take a look at the following information to better understand what happens with your retirement accounts after your death. If you have any questions, or if youd like to plan for probate avoidance, contact an estate planning attorney.
Individually Owned Assets Go Through Probate
Individually owned assets go through probate; this is true. However, perhaps, we should specify that individually owned assets, which do NOT have a beneficiary designation, go through probate.
Individually owned assets are assets that you own in your own name (and your name alone). For example, if youre single, your home and your bank account may be in your individual name.
Beneficiary Designation Assets aka Contract Assets
Assets that have a beneficiary designation are also known as contract assets. They do NOT go through probate, even though they are typically owned in an individual name. The assets are distributed pursuant to the terms of the contract (i.e. beneficiary designation form).
Examples of beneficiary designation assets are retirement accounts, such as your Roth IRA, and life insurance policies.
Your Roth IRA Does Not Go Through Probate
Your Roth IRA does not go through probate because it has a beneficiary designation. No retirement assets go through probate so long as you have named a designated beneficiary.
Probate Avoidance Caveat
Beneficiary designation assets avoid probate so long as an individual or trust is named as the beneficiary. If you name your estate as the beneficiary of these assets, probate is guaranteed. In addition, if you prefer to avoid probate you need to make sure the rest of your estate avoids probate too. In Iowa, once a probate is triggered by some assets the probate inventory includes the values of IRAs, annuities, Roth and other employer sponsored retirement accounts that could have avoided probate.
This resultwill mean the associated court costs, executor and attorney’s fees will be calculated including these scheduleditems evenif the court does not control those assets.
Where to Get Help Avoiding Probate
Probate avoidance is very difficult to do without professional help. If you have any questions, or if youd like to plan for probate avoidance, consult with a qualified estate planning attorney.