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Estate Planning for Large Balance IRA/Qualified
Plans
Planning
for clients with large balances in their IRA/qualified plans
is one of the most difficult issues an estate planner will
face. Due to the complexity of walking the minefield created
by ERISA laws and the Internal Revenue Code, estate planners
must guide their clients out of this maze because assets left
in these plans are taxed for both income and estate tax purposes.
Depending upon the decedent’s state of domicile, the
combined tax rates can exceed 75%. Thus, heirs may only receive
20 to 25% of an IRA/Qualified Plan.
Clients have many options, some of which can be combined to
meet multiple objectives, but all require intricate planning
with expert counsel.
The most common options include:
- Spousal
rollover (the traditional approach for the benefit of the
surviving spouse);
- The “stretch”
IRA which allows for designation of children, or even grandchildren
(sophisticated planning which can encompass multi-generational
objectives),
- The leveraged
IRA (combines sophisticated planning with life insurance
contracts); and
- The philanthropic
IRA (combines philanthropic intent with leveraging from
life insurance products to provide for a family legacy and
to fulfill philanthropic desires).
A comprehensive discussion of all of the options available
to clients is beyond the space limitations of this article.
However, Busch Firm estate planning professionals are prepared
to advise clients about their options and help them implement
a plan to achieve their goals.
A comprehensive discussion of all of
the options available to clients is beyond the space limitations
of this article. However, Busch Firm estate planning professionals
are prepared to advise clients about their options and help
them implement a plan to achieve their goals.
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