Precautions to take if you live in a community property state.

If you live in a community property state, your spouse is generally entitled to half of the assets that you accumulate during the marriage. And it does not matter who earned them. What's more, this right can even continue after your spouse's death and impact the ultimate beneficiary of your IRA.

Each of the nine community property states has regulations that could determine what you need to do to safeguard your IRA beneficiary designations. For example, you might need to obtain your spouse's written consent to pass more than half of your IRA to someone other than him or her. And in some states, if he or she were to die before you, the situation could become more complex.

For instance suppose that a married couple decides to name their son as the beneficiary of the husband's IRA. The wife dies first, and the husband wants to remove the son as the beneficiary. It's quite possible that he may only be allowed to change the beneficiary on his half of the account, and his deceased wife's portion must retain the original designation.

On the other hand, the community property state's law could require that the nonparticipating spouse's half of an IRA pass by the provisions in his or her will. Thereby overturning the beneficiary designation listed on the account

There are many scenarios that you and your attorney should consider when naming IRA beneficiaries, particularly when residing in a community property state. If you would like to review or update the beneficiaries on your accounts, we can help.

If you would like to meet either in person or by telephone (or simply would like to receive my FREE "Estate Planning Guide"), please use the CONTACT US link and let me know.

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Note: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin are community property states.