Estate Planning: Who is Your IRA Beneficiary?

You and Yours Blawg makes a really good point in its article, Do your heirs a big favor: Choose IRA (and other) beneficiaries.

Why is not looking at your IRA beneficiaries not wise? Because often the default beneficiary is the estate. From and IRA perspective, and estate is not a favored beneficiary. Human beings as beneficiaries have the right to stretch-out their inherited IRA's over a period of time - thus deferring any income tax on the dollars in the IRA. Estates as beneficiaries must have the entire IRA distributed within 5 years, thus triggering payment of all the income tax on the dollars.