If your husband has a large IRA and you're well off, consider disclaiming part or all of his IRA at his death. Doing so can leave more for your children. This is an estate tax avoidance strategy to be aware of.
All IRAs are subject to estate taxes when you die. That's because you can take money out of them and re-designate beneficiaries at anytime - i.e. you own and control them which puts them in you estate at your death. If you don't assign a beneficiary for your IRA (on the IRA form), your IRA will revert to your estate and will also be probated when you die to determine who gets it. So, be sure to assign a beneficiary so it won't need to be probated.
Often a couple is well-off and has a sizable about of money in the husband's IRA. Normally, he'd designate his wife as his IRA beneficiary. At his death, his wife has the option of becoming the owner of his IRA or, alternatively, keeping herself as the beneficiary of that IRA. Either way, she can use the IRA money for herself.
The value of his IRA would be in the husband's estate. But by using the unlimited marital deduction, all his IRA money would be excluded - as a deduction - from his estate tax.
That may be fine; but if she's pretty well set for money already, his IRA - and its continued growth - would wind up in her estate when she dies. That's when having a lot of money means paying a lot of estate taxes - and leaving that much less for the kids. Of course, all this depends upon just how much wealth you have and the current Estate Tax law thresholds or exemptions.
One option that husband and wife might consider is designating the wife as primary beneficiary and their children as a secondary beneficiary. With this beneficiary arrangement, the wife has the option of disclaiming some or all of the husband's IRA when he dies. She could do this if she feels that she won't need his IRA money and wants to pass it free of estate tax to their children.
Disclaiming any part of his IRA makes the children the primary beneficiaries and keeps the IRA in his estate, subject to estate tax at his death. But if his disclaimed IRA value - and any other property not transferred to his wife - is less than the estate tax exemption (for 2013, the first $5,250,000 per person or $10,500,000 per couple of your estate is exempt from federal estate tax. These amounts are annually indexed for inflation. Anything above that is taxed at a top estate tax rate of 40%), it'll pass estate-tax free to the children.
The children will inherit their father's IRA as beneficiaries. They'll name the account in 'the name of their father as deceased for the benefit of the children (named)'. Then they can spread their IRA distributions from this over the IRS life expectancy of the eldest child - and that can be many years.
Of course, they'll have to pay income tax on those distributions but the stretched distribution time should allow much more to be distributed due to the IRA's continued tax-deferred growth.