News from Samuel, Sayward & Baler LLC for June 2017 includes the articles: Five Ways to Make Sure Health Care Wishes are Carried Out, Dementia Friendly Massachusetts, Protecting your Child’s Inheritance from the Reach of a Divorcing Spouse, Long-Term Care Insurance Update, Calling all New Parents, and What’s New at Samuel, Sayward & Baler LLC.
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Long-Term Care Planning
To all of our clients who are looking to cross something off their to-do list this summer, check out this interesting read from last week’s “Your Money” Section of The New York Times. It’s never too early to start the conversation about long-term care planning! This article shows us that even people who consider themselves well-prepared financially and legally can be affected by unexpected circumstances and care costs. If you are in your 50’s or beyond, make sure you have had a conversation with one of our attorneys about for any long-term care you may require and what planning steps you may want to take now to plan for the unexpected.
July 2017
© 2017 Samuel, Sayward & Baler LLC
Five Facts to Know about Irrevocable Trusts
In my estate planning and elder law practice, many clients express curiosity about Irrevocable Trusts, wanting to know what an Irrevocable Trust is used for and how it works. Here are five things to know about Irrevocable Trusts.
1. An Irrevocable Trust has beneficiaries who have rights to the Trust property. It is a common misconception about Irrevocable Trusts that no distributions can be made from the trust. That is not true. Very often, a parent or grandparent will create an Irrevocable Trust for the benefit of a child or grandchild. The parent or grandparent may want to make a gift but does not want the beneficiary to have unlimited access to the gifted funds. This could be because the beneficiary is young, has a disability, or simply has not demonstrated good judgment in money matters in the eyes of the grantor (the person creating the trust and making the gift). The grantor may also want the gifted assets to be protected from the beneficiary’s creditors. The grantor will specify in the trust document when and for what reasons the Trustee (think “manager”) may make distributions from the trust for the beneficiary. For example, the trust might direct the Trustee to pay the beneficiary’s education or health expenses. Alternatively, the trust may permit the Trustee to use the trust funds for the benefit of the beneficiary for whatever reason the Trustee determines to be appropriate.
2. Under some circumstances, an Irrevocable Trust can be amended. As a general rule, the person who creates an Irrevocable Trust cannot amend it. However, some Irrevocable Trusts contain a provision allowing someone else to amend the trust. For example, parents who have a child with disabilities will often create an Irrevocable Trust to ensure that the assets the parents leave for the child will not cause the child to lose eligibility for government benefits. These trusts may include a provision permitting the Trustee to amend the trust if the law changes and impacts the trust, causing the child to be ineligible for such benefits.
3. The Trust creator can retain the right to change the ultimate beneficiaries. A person who creates an Irrevocable Trust can retain the power to change how the trust property will ultimately be distributed – this is called a power of appointment. For example, say Mary creates an Irrevocable Trust that states that when she dies, the trust assets will be distributed to her three children in equal shares. After the trust is created, Mary’s son Alan becomes embroiled in a nasty divorce. Mary is worried that if she dies while the divorce is ongoing, that Alan’s one-third of the trust property could end up going to Alan’s soon-to-be-ex-spouse.
Even though Mary’s trust is irrevocable and she cannot sign an amendment changing the trust terms, Mary can change how the trust assets will be distributed at her death via her Will because she reserved a power of appointment over the trust assets. A reserved power of appointment over the ultimate distribution of the trust assets allows Mary to change the distribution so that Alan’s share of Mary’s trust assets will not be reachable by Alan’s divorcing spouse.
4. The Trust creator may still be considered the owner of the assets in the Irrevocable Trust. When you transfer assets to an Irrevocable Trust, you may or may not still be the “owner” of the assets in the trust for tax purposes. Sometimes it is advantageous to be deemed to be the owner and sometimes it is not. For example, life insurance is taxable in the insured’s estate for estate tax purposes if the policy is owned by the insured. If the policy is large and the insured has a taxable estate, this means that between 10 and 40 percent of the life insurance proceeds will be lost to estate taxes. If the insurance policy is owned by an Irrevocable Life Insurance Trust, then the life insurance policy will not be deemed to be owned by the insured and the proceeds will not be taxable in the insured’s estate. On a $1 million life insurance policy, this could save between $100,000 and $400,000 of estate tax.
On the other hand, sometimes it is desirable to be deemed to be the owner of Irrevocable Trust property for tax purposes. For example, say Harry has a total estate of $850,000. He has a house that he bought for $30,000 many years ago and that is now worth $350,000 and CDs totaling $500,000. Harry does not need to be concerned about estate taxes because his total estate is valued at less than $1 million and there is no Massachusetts estate tax on estates of less than $1 million (the federal threshold is $5,490,000). However, Harry should be concerned about capital gain tax. If he is not the “owner” of his house for tax purposes when he passes away, then when Harry dies there will be capital gain tax payable on the difference between Harry’s tax basis in the property ($30,000) and the sale price ($350,000). The capital gain tax on $320,000 ($350,000 — $30,000) would be about $64,000.
If the Irrevocable Trust included provisions that caused Harry to be deemed to be the owner for tax purposes, then when the house is sold following Harry’s death, there would be no capital gain tax payable because the house would receive a “stepped-up” basis at Harry’s death. This means the tax basis in the house is equal to the fair market value at Harry’s death.
5. The person who creates the Irrevocable Trust may be the beneficiary. Clients often assume that if they transfer assets to an Irrevocable Trust they give up all rights to the assets. This is not necessarily true. A very common Irrevocable Trust used for long-term care planning is an Irrevocable Income Only Trust. In this type of trust, the grantor (the person creating the trust) receives the income generated by the assets in the trust. For example, let’s say that Jane owns a three-family rental property and is worried that if she needs long-term nursing home care, the property will be consumed by the costs of that care. She doesn’t want to give the property to her children because she is worried about her children’s creditors (divorcing spouse, bankruptcy, tax lien, etc.). In addition, Jane wants to keep receiving the rental income. Jane can transfer the property to an Irrevocable Income Only Trust and continue to receive the net rental income. After the five-year ineligibility period for gratuitous transfers has passed, the property in the Irrevocable Trust would not be deemed to be owned by Jane in the event she applies for Medicaid (MassHealth) benefits to pay for her long-term care under the current law.
These are just five facts to know about Irrevocable Trusts. If you want to know more about whether an Irrevocable Trust is right for your situation, contact an experienced estate planning to discuss your goals.
Attorney Suzanne R. Sayward is a partner with the Dedham firm of Samuel, Sayward & Baler LLC which focuses on advising its clients in the areas of estate planning, estate settlement and elder law matters. She is certified as an Elder Law Attorney by the National Elder Law Foundation, a private organization whose standards for certification are not regulated by the Commonwealth of Massachusetts. This article is not intended to provide legal advice or create or imply an attorney-client relationship. No information contained herein is a substitute for a personal consultation with an attorney. For more information visit www.ssbllc.com or call 781/461-1020.
July 2017
© 2017 Samuel, Sayward & Baler LLC
Long-Term Care Insurance Update
Long-term care is on people’s minds more and more these days. Most baby boomers, now between their 50s and their 70s, know families with someone who needs personal care. Directly knowing a friend or family whose financial life is upended by the bone crushing expense of long-term care is motivating boomers who have Long-Term Care Insurance (LTCi) to review their policies. Many baby boomers who haven’t acquired LTCi are reconsidering and looking for updated information. Fortunately, there is some good news for both groups.
Kudos if You Already Own LTCi
You made a smart decision if you acquired LTCi more than 10 years ago. This is especially true if your policy provides a significant reserve of money to cover care at home or in assisted or skilled nursing settings for an affordable premium. Because you got on board with LTCi early, the challenge that you may experience in the near future could be a premium increase.
Many LTCi companies recently asked the Massachusetts Insurance Department for permission to increase premiums on some LTCi policies, mostly those issued more than 10 years ago. Most of those premium increases have been approved. Policyholders will usually be notified by the LTCi company 60 days prior to the premium increase. Communication from the LTCi company will include a variety of options for policy owners willing to decrease their coverage to reduce the amount of the premium increase. Even if your policy’s premium increases, it will be considerably less than what a similar policy would cost you today. If you acquired LTCi in the last several years, you are less likely to face a premium increase now because insurance companies offering LTCi learned to price their offerings more accurately, meaning higher rates than in the past.
Stand Alone and Hybrid LTCi Is Still Affordable for Many Boomers
If your age is between 50 and 70-plus, you’ve likely seen an illness or injury derail a friend’s or couple’s retirement dream of living in their own home. If you don’t own LTCi and realize you don’t have a sound plan for how to be cared for in your own home if you or your spouse needs care, there is still time to consider LTCi. Most financial professionals qualified to provide LTCi advice will educate you about what is available at no cost.
LTCi premiums are higher than they were years ago. That should not deter you from spending time to understand whether there is an LTCi policy that makes sense for you. Higher premiums underscore the importance of designing a policy so that it provides benefits at a cost you can afford now and for the rest of your life. The good news about the higher LTCi premiums is that they are more realistic and LTCi companies are likely to request fewer, if any, increases in the future.
New Hybrid LTCi policies offer some additional good news. Hybrid LTCi policies combine one kind of insurance with another kind of insurance. In most cases, LTCi is linked with life insurance. Though hybrid policies have been available for years, they have become increasingly popular because of three policy features that can include: (1) a guarantee that premiums will never increase; (2) the ability to get back a significant portion of the premium you’ve paid if you have not used the long-term care benefit; and (3) the hybrid policy guarantees* that if you die, your beneficiary will receive a death benefit in an amount that correlates with what benefits have not been used.
Some Examples of Standard and Hybrid Policy Benefit Amounts and Premiums
Table 1, below, gives you an idea of the approximate premiums for three levels of stand alone, traditional LTCi, for illustrative purposes only. To know how this applies to you, an application that includes a health evaluation is necessary:
* Guarantees extend to the claims-paying ability of the issuer
| Table 1 | ||
| Level A | ||
| $4,500 Monthly Benefit
2 Year Benefit Period $108,000 Pool of Money 3% Compound Inflation 90 Calendar Day Deductible |
Female
Monthly Premium |
Male
Monthly Premium |
| Age 50 applying with a Partner/Spouse | $125 | $85 |
| Age 60 applying with a Partner/Spouse | $166 | $111 |
| Age 70 applying with a Partner/Spouse | $268 | $192 |
| Level B | ||
| $6,000 Monthly Benefit
3 Year Benefit Period $216,000 Pool of Money 3% Compound Inflation 90 Calendar Day Deductible |
Female
Monthly Premium |
Male
Monthly Premium |
| Age 50 applying with a Partner/Spouse | $217 | $136 |
| Age 60 applying with a Partner/Spouse | $286 | $175 |
| Age 70 applying with a Partner/Spouse | $446 | $287 |
| Level C | ||
| $7,500 Monthly Benefit
5 Year Benefit Period $450,000 Pool of Money 3% Compound Inflation 90 Calendar Day Deductible |
Female
Monthly Premium |
Male
Monthly Premium |
| Age 50 applying with a Partner/Spouse | $379 | $223 |
| Age 60 applying with a Partner/Spouse | $500 | $280 |
| Age 70 applying with a Partner/Spouse | $770 | $457 |
Level A shows the monthly premium of a policy that provides a benefit of up to $4,500 and a total reserve (pool of money) amount of $108,000. Although this is described as lasting two years (24 months), this is only for the purpose of describing that $4,500 for 24 months is $108,000. In fact, if you spend less than $4,500 in any month, the unspent money is still available until the entire $108,000 is used.*This is a hypothetical example and is for illustrative purposes only
- Level A shows that a married couple, both aged 60, would pay $166 monthly for the woman and $111 monthly for the man and each would have $108,000 of total benefits.
- Level B shows the monthly premium of a policy that provides a benefit of up to $6,000 monthly and a total reserve of $216,000. A married couple, man age 70 and woman age 60, would pay $287 monthly for the man and $286 monthly for the woman, for a total of $216,000 each of benefits.
- Level C shows the monthly premium of a policy with a benefit of up to $7,500 monthly and a total reserve of $450,000. A married couple, both 60, would pay $500 monthly for the woman, $280 monthly for the man, for $450,000 each of benefits.
- Premiums for single persons are about 40% higher than those shown in Table 1.
Hybrid policies require significant premiums to achieve the combined life and LTCi benefits and features described above. For example, a single man, paying a one-time premium of $50,000 might expect a monthly benefit of up to $2,942 monthly and a total reserve of $211,860, and the amounts would double for a premium of $100,000. Some companies permit the premium to be paid in annual installments from 2 to 10 years, though for an increased amount. The advantages of paying this significant premium include a guarantee that once the first premium is paid, there will not be any increase.
A married couple, both age 65, each purchasing a hybrid policy with a premium of $50,000 each might expect these approximate benefits: up to $4,199 monthly with a total reserve of $302,328 for the woman and $4,737 monthly and a total reserve of $341,064 for the man.
Conclusion
Financial upheaval and family heartache are inevitable when a family member needs long-term care and there is no plan in place to cover the costs. Planning for long-term care does not always require LTCi, nor are such insurance policies affordable for everyone. If you are considering what will happen if you need care — especially if your hope is to continue living in your own home for as long as possible, LTCi is worth considering. As always, when you make decision about complex issues involving finances, consult your trusted advisor.
Samuel Financial LLC is located at 858 Washington Street, Suite 202, Dedham, MA 02026 and can be reached at 781.461.6886. Securities and advisory services offered through Commonwealth Financial Network, member FINRA/SIPC, a registered investment advisor. Fixed insurance products and services offered through CES Insurance Agency.
Protecting your Child’s Inheritance from the Reach of a Divorcing Spouse
On May 11, our firm’s bi-monthly Smart Counsel presentation focused on the best way to protect the inheritance you will leave to your children from the reach of your child’s spouse in the event of a divorce. There were two parts to our program. First, family law attorneys Barbara Nason and Amy Vaughn spoke about how a good prenuptial agreement can protect a child’s inheritance in the event of divorce. Attorneys Nason and Vaughn shared with attendees the “must-haves” if the prenuptial agreement is going to be effective. These included the requirement that each party have his/her own attorney and that the parties fully disclose their assets, liabilities and expectancies to each other. This means that the parents of the engaged couple need to provide their child with information about the amount the child may expect to inherit.
The second part of the program concentrated on how to protect your child’s inheritance in the event he/she does not have a good prenuptial agreement in place. Attorney Suzanne Sayward advised the audience that leaving assets to your children in trust rather than outright can be an effective way to protect the beneficiary’s inheritance, provided the Trust is properly drafted and administered.
If you are concerned about protecting the inheritance you plan to leave your children from the reach of their creditors, including a potential divorce, call us to schedule a meeting with one of our attorneys to discuss your options.
June 2017
© 2017 Samuel, Sayward & Baler LLC
Dementia Friendly Massachusetts
The Massachusetts Executive Office of Elder Affairs has a new initiative to raise awareness about the prevalence of dementia in our state, in an effort to make our communities and those who live in them more “friendly” to those who suffer from dementia. Did you know that one in eight older adults in Massachusetts has Alzheimer’s disease or a related disorder? Nearly 60 percent of those with dementia live in their own communities. One in seven of those with dementia lives alone.
Those who suffer with this disease, and their caregivers, need support, and Massachusetts is one of the states taking the lead in this “dementia friendly” initiative. Please watch this short 2.5-minute video to learn more about the Dementia Friendly Massachusetts Initiative. We were so pleased to see our wonderful clients Al and Jackie DeMeo in the video. Hopefully it will inspire you to work with others to make your community safer, more inclusive, and respectful for residents affected by Alzheimer’s disease and related dementias.
June 2017
© 2017 Samuel, Sayward & Baler LLC
SJC Issues Favorable Decision for Irrevocable Income Only Trusts
On May 30, 2017, the Supreme Judicial Court vacated the judgments of the Worcester County Superior Court companion cases, Daley and Nadeau, concluding that the right to use and occupy a residence does not make the assets contained within an irrevocable income only trust countable for MassHealth purposes. The cases, which were argued before the SJC on January 5, 2017, will undoubtedly have a significant impact on the landscape of asset protection planning for long-term care purposes as the previously unsettled case law made it difficult for seniors to effectively plan for future nursing home care costs. Irrevocable income only trusts, which were historically time-tested tools for protecting a nursing home resident’s home from a MassHealth lien, have been at the epicenter of elder law litigation since 2009. With a favorable SJC decision on these cases, elder law attorneys and their clients can breathe a sigh of relief regarding previously created trusts which allow the grantor to continue to live in the home transferred into the irrevocable trust. Going forward, elder law attorneys can feel more confident about advising their clients on the use of these protective instruments.
Click here to read the decision:
http://www.mass.gov/courts/docs/sjc/reporter-of-decisions/new-opinions/12200.pdf
Click here to read previous posts on this issue:
https://ssbllc.com/blog/masshealths-treatment-of-irrevocable-income-only-trusts-as-murky-as-ever/
https://ssbllc.com/blog/time-for-the-big-leagues-irrevocable-trusts-get-called-up-to-the-sjc/
https://ssbllc.com/blog/options-to-protect-the-primary-residence-from-long-term-care-costs/
If you have specific questions about protecting your home from long-term care costs, please call our office at 781/461-1020 and schedule an appointment with one of our attorneys.
June 2017
© 2017 Samuel, Sayward & Baler LLC
Five Ways in which a Trust is Better than a Will
Wills and Trusts are both estate planning documents used to pass assets on to beneficiaries at death. However, there are distinct advantages to using a Trust over a Will. Here are five ways in which a Trust is better than a Will to pass your estate to your beneficiaries.
- A Trust can be used to Avoid Probate – a Will cannot. Probate is the process of changing the title on assets when someone passes away. Assets that are owned in a deceased person’s individual name and for which there is no named beneficiary are no longer accessible once the owner of the asset has died. In order for family members to gain access to accounts or other assets in the deceased’s individual name, they must file a petition with the probate court and wait for the court to approve the Will and appoint the Personal Representative. This can be a long and costly process during which bills cannot be paid and assets cannot be managed. A Trust is an excellent probate avoidance tool because assets that are owned in the name of a Trust are immediately accessible to the trust-maker’s designated successor.
- A Trust can provide Creditor Protection for the Inheritance you Leave to Beneficiaries – a Will cannot. Many people worry that the inheritance they leave to their children will be lost to their children’s creditors such as a divorcing spouse, unpaid credit card bills, a bankruptcy, a business loss, or a lawsuit. Sadly, this is often the case when assets are distributed to beneficiaries via a Will. A Trust allows the maker to safeguard an inheritance from the reach of the beneficiaries’ creditors by keeping the assets out of the name of the beneficiary. Ownership of the assets remains in the Trust. The beneficiary will have access to the assets in accordance with the directions you leave in your Trust. You may also allow your beneficiary to serve as Trustee, allowing the beneficiary to manage her own inheritance. By leaving assets to your beneficiaries via a Trust rather than outright via your Will, you can ensure that the assets you worked so hard for will be available to your children and future generations.
- A Trust can Protect Governmental Benefits for a Person with Disabilities – a Will cannot. If you have a child, grandchild or other beneficiary with disabilities, then a Trust is a must. If you leave assets to a person who receives needs-based governmental benefits via your Will, it will place your beneficiary in the difficult position of either losing those benefits, or transferring the inheritance into a Trust of which the state must be the beneficiary at the beneficiary’s death. Unless the inheritance you are leaving is so significant that the monetary and medical benefits available to the person through programs such as Social Security and Medicaid are no longer important, then making sure that those governmental benefits continue to be available is vital. Leaving assets to a person with disabilities via a Trust is the best way to ensure those governmental benefits are preserved and that the inheritance you leave will be available to pay for expenses that are not covered by these governmental benefits, which while vital to many, are limited in their scope.
- Trusts can Reduce Estate Taxes – a Traditional Will cannot. Many married couples have so-called “I-love-you” Wills, which leave all assets outright to the surviving spouse upon the first death. If you have an estate of more than $1,000,000, then using “I-love-you” Wills means that money you think you are leaving to your beneficiaries will in fact be going to the Commonwealth of Massachusetts in the form of estate tax payable at the surviving spouse’s death. If you would prefer that your assets pass to your family, create Trusts to reduce estate taxes. Estate tax planning via Trusts for married couples is standard planning and permissible under both state and federal tax laws.
- A Trust can Administer Assets for Minor Beneficiaries without Court Intervention – a Will cannot. Leaving money directly to a minor creates an administrative nightmare because the law provides that a minor does not have the legal capacity to receive assets. The parent of the minor also does not have the ability to act as the child’s legal representative until the court says so. As such, if you die with a Will that leaves money to minor beneficiaries, the court will need to appoint a Conservator to receive that inheritance for your children. The Conservator will be required to report annually to the court and the court will appoint an overseer (guardian ad litem) to make sure the Conservator is doing his or her job for your minor beneficiaries. This means huge costs and long delays in administering funds for minors. It also means that when the minor turns 18, he or she will be entitled to receive all of those assets and will be free to do with them as he or she wishes (think fast cars, spring break, and lots of shopping). Creating a Trust to receive assets passing to a minor, or even to a young adult beneficiary, is the best way to ensure that the court is not involved in the process, that the person you want to manage assets for the beneficiary is able to do so, and that the beneficiary can use the assets only for purposes you decide are important and/or at ages that you dictate.
These are just five ways in which a Trust is superior to a Will. If you want to know more about whether a Trust is right for your situation, contact an experienced estate planning attorney to discuss your goals.
Attorney Suzanne R. Sayward is certified as an Elder Law Attorney by the National Elder Law Foundation. She is a partner with the Dedham firm of Samuel, Sayward & Baler LLC. This article is not intended to provide legal advice or create or imply an attorney-client relationship. No information contained herein is a substitute for a personal consultation with an attorney. For more information visit www.ssbllc.com or call 781/461-1020.
May 2017
© 2017 Samuel, Sayward & Baler LLC
Who Should You Name as the Beneficiary of Your IRA?
For many people, their IRA (or 401K) is their largest asset, other than perhaps their home, and making sure that is protected for their beneficiaries is important. Here are some things to consider when naming beneficiaries.
- Name your spouse. As a general rule of thumb, if you are married you should name your spouse as the beneficiary of your qualified retirement accounts. The tax laws include favorable provisions for treatment of IRAs which pass to a surviving spouse. For example, a surviving spouse can rollover the IRA and make it her own which will allow her to take withdrawals over her life expectancy. Situations where it may not be appropriate to name your spouse include:
- A second marriage where the IRA owner wants to make sure the balance of his IRA passes to his children at the death of the spouse
- The spouse is not able to manage assets
- The spouse is likely to need long-term care
- Consider the Stretch Out. The tax laws presently permit a designated beneficiary of an IRA to take withdrawals from the IRA over the life-expectancy of the beneficiary. This is advantageous because the amount that does not need to be withdrawn grows tax-free. Here’s an example. Mom has a $600,000 IRA. She names her 60-year old son (Sam) and her 30-year old granddaughter (Gina) as the equal beneficiaries of the IRA. According to the IRS, Sam has a life expectancy of 25.2 years and Gina has a life expectancy of 53.3 years. Sam would be required to withdraw about 4% of his share ($11,900), the first year, while Gina could take out less than 2% (about $5,600). Remember, the funds which do not need to be withdrawn continue to grow income tax free.
- Consider the Beneficiary. While the tax laws permit a beneficiary of an IRA to take withdrawals based on the beneficiary’s age, the beneficiary is not required to do so. A beneficiary of an inherited IRA may withdraw as much as he wants, at any age, without penalty. However, the withdrawals are 100% taxable income to the recipient which could result in a large tax liability and a significantly reduced balance. For example, if the beneficiary of a $500,000 IRA takes all of the money out in one year, the income tax liability on that liquidation could be close to $200,000. Further, the interest and dividends earned on the remaining balance of $300,000 will be reduced by income taxes every year. If you have a large IRA that you plan to leave to beneficiaries whom you believe will ‘take the money and run’ you may want to re-consider your options.
- Never name a minor. Knowing that an IRA beneficiary can stretch out withdrawals based on life expectancy leads some people to name minor children or grandchildren as beneficiaries. Don’t do it!! When a minor is the beneficiary of an IRA the only way to gain access to the IRA is to have someone, usually a parent, petition the probate court to be appointed as the child’s conservator. This is an expensive and time consuming process. But it gets worse! Once appointed, the conservator will be required to file annual accountings with the probate court reporting on the activity in the account. And even worse! In Massachusetts the courts require that the conservator (or her attorney) appear in court once per year to present the annual accounting to a judge for approval. The costs involved could easily run many thousands of dollars.
- Consider naming a Trust as the beneficiary but be careful. Naming a Trust as the beneficiary of an IRA addresses many of the issues raised above. A Trust can:
- Allow minor children to be the beneficiaries without the need for a conservatorship.
- Ensure that the funds are withdrawn over the lifetime of the beneficiary rather than all at once.
- Provide creditor protection for inherited IRAs.
The IRS has very strict rules for Trusts which receive qualified retirement funds. If the Trust terms do not comply with those requirements it will not qualify as a designated beneficiary. The consequence is that the payout cannot be made over the life expectancy of the trust beneficiary and instead, all of the funds will have to be paid out of the IRA within five years of the IRA owner’s death and the tax paid.
Planning for the ultimate distribution of a large IRA is an important aspect of planning your estate. This is money you worked all your life to accumulate. Take the time to consult with a knowledgeable estate planning attorney who can help you understand your options and make the best choice for your family.
April 2017
© 2017 Samuel, Sayward & Baler LLC
February 2017 Newsletter
News from Samuel, Sayward & Baler LLC for Febraury 2017 includes the articles: Five (Good) Reasons to Treat your Children Differently in Your Estate Plan, Employer Sponsored Retirement Plans: What You Need to Know, MassHealth Update, We Get Around, SSB Partners with Honoring Choices, Spreading Some Holiday Cheer and What’s New at Samuel, Sayward & Baler LLC.