With tax season upon us, many are considering the benefits of making contributions to retirement accounts.  When completing an IRA account application for your 2009 IRA contribution, closely consider the impact of whose name you place in the primary and contingent beneficiary slots. 

The disposition of your estate is based on the decisions that you make during your lifetime, and selecting a primary and contingent beneficiary of your IRA and even life insurance may not be as simple as it may appear. 

As natural heirs to ones estate, children, grandchildren, parents siblings and nieces and nephews are often named as primary or contingent beneficiaries of their IRAs and life insurance.  If they are minors, this well intended designation may not go as smoothly as one may expect.  The custodian or life insurance company, depending on the value of the account or policy, is not likely to pay the benefit until a formal guardianship is established over the minor's property.  This is true even when a parent is caring for the beneficiary. 

Significant consideration should also be given to the risk of naming an aging parent or sibling as an heir to one's estate -- whether in a last will and testament or by way of a beneficiary designation.  If you leave property to a senior citizen or retiree, who at a later date needs Medicaid (MassHealth  in Massachusetts)  to pay for long-term care services, the asset is likely to be at risk. 

Again the issues presented here are not limited to beneficiary designations, similar issues arise when leaving property to a minor in a last will and testament or to a special needs or disabled person.  

To learn more on guardianships, click here or for more information on planning for elders, click here.