An IRA can be stretched out over the lifetime of several beneficiaries, therefore helping out the IRA owner's spouse as well as the children and the grandchildren. What basically needs to be done is in order to stretch an IRA out is that the owner has to name his spouse as the beneficiary after his death. They can also choose joint payouts to minimize their IRA payouts, thus allowing more money to appreciate in the account. Keep in mind that your client needs to make these decisions before April 1st of the year that they turn 70 years old.
One of the best ways for your client to do this is to name their spouse as their beneficiary. After their death, the spouse can take over the IRA and restart it. He or she can name heirs or even contingent heirs (in case the original heir dies). After the owner passes on, the IRA is split into payouts for the remaining years of the life expectancy of the heir(s). If, for example, the life expectancy of the heir is 30 years, the IRA is broken up into thirty pieces and the payouts are distributed for next 30 years.
What happens when the original heir dies' In such an event, the contingent heir can take over the payouts. For the remaining years of the IRA distribution, the payouts would continue in the name of the contingent heir. The IRA would once again continue to behave as if the original heir never died. For example, if the heir died three years after the original owner of the IRA, the contingent heir would receive payments for the next 27 years.
Setting up such a "stretching" IRA can sometimes be a little tricky. This kind of IRA will only work if your client is very careful with all the paperwork and documentation. In addition, your client should be sure to consult with professional when attempting to set up this type of an IRA. They should make sure that they understand all angles of the IRA before deciding what is in your client's best interest.