In recent Private Letter Ruling (PLR 201706004) the IRS allowed a widow to do a spousal rollover, but with an interesting twist that also ruled the five-year rule applied because the IRA had no designated beneficiary.
Last week my Slott Report article created something of a firestorm in my email inbox. Shortly after it was posted I began to receive a litany of emails, all written very respectfully, but all of which said my post was incorrect and that revisions were necessary in order to avoid Slott Report readers from making errors with respect to their planning. To recap the article and the point of contention in a nutshell; I gave the hypothetical of a married couple, of which one spouse was about to pass and owned stock in his name only at a loss. I then suggested that a sly strategy would be to gift that stock to the other spouse prior to the owner-spouse’s death so as to preserve the potential loss.
It’s not exactly a fun thing to think about, but death is an absolute inevitability. When that time comes or more aptly, sometime before that time comes, there are a number of planning strategies that you can implement to make sure that you preserve tax benefits and minimize present and future income taxes for your heirs. One such planning opportunity may present itself if you own an investment with a loss as your time nears. The issue and possible planning options are best explained by example, so with that in mind, consider the following case of “Bob and Betty:”
Death is inevitable. It comes for us all at one point or another. Some sooner than later, but none are able to escape its grasp. Whenever that time comes, your “stuff,” including your financial assets, generally live on, and are still essentially yours until they are legally transferred to another person or entity. That transference of assets can occur in any number of ways, but often includes a process known as probate.
In 2006, Alan, a strapping young man who had just turned 50, collapsed and died of a massive heart attack while attending Sunday morning Mass with his wife Karen. Alan and Karen co-owned a business. Alan was a contractor and Karen handled the accounting and billing. Karen was fairly savvy financially. However, because she felt she had to get everything settled “right away” after Alan’s passing, she made several costly mistakes. It's a story you and your clients can learn from.
Greetings from the 2016 AICPA National Advanced Estate Planning Conference! Having presented the last of my three sessions here on Monday evening, I’ve been enjoying the rest of my time by meeting many CPAs and other professionals here, as well as attending a host of excellent sessions. One session which I particularly enjoyed was presented by Anne Coventry and Karin Prangley, and covered the latest developments in the area of digital estate planning. That may not seem very important to you at first glance, but the reality is that it could be VERY important. And that importance is only likely to grow in the coming years.
We are all going to die someday. That is pretty much guaranteed. What is not guaranteed is who is going to inherit our “stuff?” We can use a will, a trust, and beneficiary forms. This story is about a man who did not use his beneficiary form.
You have contributed to your IRA for years. You have made wise and thoughtful investments. Maybe you have rolled over funds to your IRA from your company plan. You may now have a significant balance. So far, you have taken smart steps toward a secure future. Don’t stop your careful planning there. It is time to ask yourself an important question, “Who will inherit my IRA?”
Do you have a will? Most people who need one, realize that they need one. Most of those people actually do something about it and put a will in place for their estate. But what is your will really doing for you?
The law allows you to leave money and property to a beneficiary after your death. Generally, the beneficiary must be a person or legal entity capable of accepting the property. Individuals almost always name a beneficiary of their IRA who will inherit the funds after their death. Usually the IRA beneficiary is a person such as a spouse, child, or grandchild. But IRA owners can name a legal entity as their IRA beneficiary, such as a charity, estate, or trust.
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