Estate Planning for Large Balance IRA/Qualified Plans

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Estate Planning, Probate, and Trust Administration

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:

1. Spousal rollover (the traditional approach for the benefit of the surviving spouse);
2. The “stretch” IRA which allows for designation of children, or even grandchildren (sophisticated planning which can encompass multi-generational objectives),
3. The leveraged IRA (combines sophisticated planning with life insurance contracts); and
4. 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.