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IRA benefits are subject to big tax bites, estate tax and income tax. All professionals are aware of this.
However we have seen mistakes made by some investment professionals that have been costly to their
clients, or their clients families because beneficiary designations have not been carefully planned or the
because the minimum distribution elections do not jibe with other elements of the estate plan or because
opportunities to delay distributions, deferring the income tax penalty, have been lost.
Many attorneys financial consultants and CPA’s are not intimately involved with the intricacies of these
provisions of the tax law, and sometimes are not familiar with the intimate details of a clients estate plan. You
as a professional advisor can best serve your clients by making sure that beneficiary designations,
distribution elections, and account management are surveyed by a competent professional in this field.
SOME OF THE MISTAKES WE HAVE SEEN
Contingent beneficiaries. We have seen instances where no contingent beneficiaries are named and in
some instances this has thrown the plan benefits into the probate estate of the plan participant (P).
This often defeats the clients objective of avoiding probate through the use of revocable trusts or other means.
In other instances where substantial IRA benefits are involved, using the simple designation (all my children
equally) turns out to be not what the client really wants because of the desire to delay receipt of requests to
children or grandchildren until a certian level of maturity is reached. In other words an estate plan can be
carefully worked out with respect to other properties while significant IRA accounts are more or less left
dangling.
DOES THE SPOUSE REALLY NEED ALL THE MONEY?
The normal principal beneficiary is P’s spouse. On the surface this almost always appears to make sense,
because the spouse can roll over the IRA at P’s death. However in second marriage situations or where the
IRA is the principal asset, this may be a waste of valuable tax a\saving opportunities. Similarly if spouses
death occur shortly after P’s death, before a roll over opportunity can be taken, and further planning done, the
IRA account might go to the wrong place, or just as bad, valuable tax deferments may be lost.
©BRANDT, FISHER, ALWARD & ROY, P.C.
This newsletter is provided for informational purposes and should not be acted upon without professional
advice.
| WEALTH CONSERVATION: PROFESSIONAL ALERT Brandt, Fisher, Alward & Roy, P.C. |
| November 2000 IRA’s - MONEY DOWN THE DRAIN? by James R. Modrall III, J.D., C.P.A. |
| If you would like to receive future editions of the monthly Wealth Conservation Newsletter directly to your e-mail account, please e-mail our office using the following link: Estate Planning Newsletter |
| Brandt, Fisher, Alward & Roy, P.C. Attorneys at Law |