Moynihan Lyons ensures that maximum stretch-out capabilities are contemplated and preserved for IRA beneficiaries. Sophisticated planning incorporates protection to fulfill the settlorâ€™s intent even when the primary beneficiary passes away.
In recent years, IRS rules have expanded the period over which an IRA owner and his or her spouse may take Required Minimum Distributions (RMD’s) and greatly lengthen the period over which a non-spouse beneficiary may now stretch out RMD’s after the owner’s death. The stretch out of RMD’s results in longer tax-deferred compounding inside the IRA and much greater potential family wealth accumulation making IRAs one of your most valuable assets for passing wealth down from generation to generation.
Many parents, and their financial advisors, believe that naming the children as IRA beneficiaries is sufficient to assure the stretch out. They assume the children will properly take only RMD’s or seek assistance from the parent’s financial advisor to make sure the stretch out occurs. However, many beneficiaries decide to cash out the inherited IRA earlier than required, “blowing” the stretch out entirely.
One solution is to use a trust as beneficiary instead of the IRA being paid directly to a beneficiary. Unfortunately, IRS rules make it difficult for the typical family revocable living trust to take advantage of the maximum stretch out based on each beneficiaryâ€™s life expectancy, requiring all to use the shortest life expectancy or to cash out in 5 years. Further, there may be, now or in the future, situations when protection is more important for a beneficiary than income-tax stretch out, e.g., a beneficiary undergoing divorce or receiving needs-based government benefits. Attempting to solve these problems with special language in a living trust is rarely satisfactory.
Since September, 2005, a properly drafted stand-alone IRA Designated Beneficiary Trust can be utilized for income-tax stretch out and asset protection. These trusts help maximize family wealth accumulation and enhance protection for the clientâ€™s beneficiaries against divorce, lawsuits, creditors, loss of government benefits, and additional estate taxes when the remaining IRA is passed down to the next generation.
While disability planning, retirement planning, and special needs planning can be ‘top of mind’ issues for boomers or older seniors, there are two additional essential estate planning needs that are not directly tied to the economy. These two concerns, if not addressed adequately, are responsible for a lot of family [...]
The maximum amount that a Veteran or Surviving Spouse who is eligible for Aid & Attendance will receive a 1.7% cost of living increase in 2013. Here are the new rates: Max. Annual Max. Monthly Pension Rate Pension Rate Status (Income Limit) (Income Limit) Single Veteran $20,772 $1,731 Married Veteran [...]
Panel discussion re the new draft Medi-Cal regulations and how they will affect everyone in the elder care community.
We have just received notice of the amount of the 2012 increase to the Aid & Attendance benefit.Â Starting in January, married Veterans can receive up to $2,019/mo. in reimbursement for unreimbursed medical expenses.Â Single Veterans can receive up to $1,703/mo.Â And Surviving Spouses may be eligible for up to $1,09 [...]
So what can I share with the adult children of my clients who are looking for a bit of financial relief?
Most Americans have never discussed what should happen when they die. There are many decisions to make, yet they have very little help in making those decisions. Studies show that more than 90% of Americans believe that pre-funding their funeral is a good idea, yet only 12% have done it. Studies also show that elder law and esta [...]
There are unique planning requirements for families with children, grandchildren or other family members (such as parents) with special needs. However, a lot of misconceptions exist in this area that result in costly mistakes in planning for special needs beneficiaries. In this post we will cover the three most common mistakes r [...]
Medi-cal (called Medicaid in states other than California) planning can be divided into two types based on urgency: pre-planning and crisis planning. Pre-planning is for those individuals who have not yet begun to spend their assets on private care, but may need to in the coming years. Crisis planning is for those individuals us [...]