- Thursday, October 27, 2011 - 9:00 am to 5:30 pm
- Natalie Choate
- Estate and Distribution Planning for Retirement Benefits: An Intensive All-Day Workshop
- The Cunningham Room, 4th Floor West Tower Manchester Hyatt Hotel
Online Registration
Hotel Reservations
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Course Objective |
Natalie explains how to deal with retirement benefits as part of a client’s estate plan: whom to choose as beneficiary of the plan; how best to leave retirement plan assets to a minor, a spouse, a disabled beneficiary, or a charity; options if the retirement benefits are the only assets available to fund the client’s “credit shelter trust”; effects of naming a “QTIP” trust as beneficiary; and generation skipping tax issues.
She also explains the basics of the “minimum distribution rules” and “IRS trust rules” for retirement benefits, describes the 17 other topics you must master to become an expert in estate planning for retirement benefits, and lists the resources you will need to keep up in this field.
In any given situation of planning for disposition of a client’s retirement benefits at death, there are only a few choices available. Natalie lists the options for various common planning problems, describe the pros and cons of each choice, suggests what type of client each option is suitable for, and (in some cases) provides sample forms to carry out the plan.
Though in many cases no solution will be perfect, or more than one solution would be suitable, getting an estate plan into place should be easier once the client understands the “menu” of available options and the trade-offs involved in each choice. |
Distribution Planning for Employee Benefits |
| A. INTRODUCTION |
| 1. How to Do Estate Planning for Retirement |
| 2. Abbreviations and Acronyms Used in this Outline |
| 3. Other Terms Used in this outline |
| B. SIX CHOICES OF BENEFICIARY: THREE “GOOD,” THREE “BAD” |
| C. HOW TO LEAVE BENEFITS TO YOUR CHOSEN BENEFICIARY |
| 1. Five Ways to Leave Benefits to (Or for the Benefit Of) a Minor |
| a. Not recommended: Leave benefits outright to minor |
| b. Recommended, for smaller sum: Leave benefits to custodian UUTMA |
| c. Recommended: Leave benefits to a Conduit Trust (or in a trusteed IRA for the benefit of the minor) |
d. Recommended: Leave benefits to a see-through or non-see-
through accumulation trust for the minor |
e. Recommended: Leave benefits to a see-through or non-see-
through accumulation trust for the minor |
| f. Case study: Stan and Stacey Steinmetz: Benefitting minors |
| g. Transferring an IRA out of an estate or trust |
| 2. To Multiple Beneficiaries |
| a. Recommended, for most typical situations: Fractional shares |
| b. Recommended, in certain cases: Establish separate IRAs, during participant’s life, one payable to each beneficiary |
| c. Recommended, for the rare plans that will accept it: Beneficiaries’ shares determined by a formula |
| d. Acceptable: Some beneficiaries receive a pecuniary amount. |
| e. Not recommended, if you want “separate accounts” treatment: Leave benefits to multiple beneficiaries through a trust |
| 3. To a Disabled Beneficiary: A Tale of Two Families |
| a. Supplemental needs trust for family of modest means |
| b. Conduit trust for disabled beneficiary: Very wealthy family |
| 4. To the Surviving Spouse |
| a. Anticipate spouse’s disability |
| b.Simultaneous or close-in-time deaths |
| 5. To Fund the Credit Shelter Trust |
| 6. To Benefit a Spouse “For Life Only”; Second Marriages, QTIPs, Etc. |
| a. Recommended: Leave some benefits outright to spouse and some outright to the children |
| b. Acceptable as a compromise sometimes: Make QTIP trust a Conduit Trust for spouse |
| c. Recommended: Leave benefits outright to spouse, leave other assets to (and maybe buy life insurance for) children |
| d. Not recommended: Convert to a Roth IRA, use Roth to fund QTIP |
| e. Not recommended: Name spouse as beneficiary, on condition that she will name participant’s children as beneficiaries of her rollover IRA |
| 7. Larger Estates: MRD Planning Vs. GST Planning: Case Study |
| a. Facts: Dave & Dolly Brick example |
| b. Dave’s GST tax-avoiding estate plan |
| c. Conflict between GST goal and MRD “stretch” goal |
| d. Five possible solutions |
| 8. Seven Ways to Leave Benefits To Charity |
| a. Name charity directly as sole plan beneficiary |
| b. Leave benefits to charity and others using fractional shares |
| c. Leave pecuniary gift to charity, residuary gift to individuals |
| d. Formula bequest in beneficiary designation |
| e. Leave benefits to charity through a trust |
| f. Leave benefits to charity through an estate |
| g. Disclaimer-activated gift |
| D. HOW TO DRAFT THE BENEFICIARY DESIGNATION FORM |
| 1. Name a contingent beneficiary, part I: one primary beneficiary |
| 2. Name a contingent beneficiary, part II: multiple primary beneficiaries. |
| 3. Specify that contingent beneficiary takes in case of disclaimer, not just death |
| 4. Require the plan to provide information to the participant’s executor |
| 5. Require administrator to acknowledge receipt of beneficiary designation |
| E. 17 THINGS YOU MUST KNOW ABOUT RETIREMENT |
| 1. The Minimum Distribution Rules |
| a. Why the MRD rules are important |
| b. Summary of the MRD rules |
| c. When achieving the “stretchout” does not matter |
| 2. IRS’s “MRD Trust Rules” |
| a. What the MRD trust rules are |
| b. Four ways to achieve see-through trust status |
| c. IRT (trusteed IRA) as substitute for a Conduit Trust |
| 3. The Other 15 Things Practitioners must Know about Retirement |
| a. IRD: Income in respect of a decedent |
| b. Trust accounting treatment of retirement benefits |
| c. Federal transfer taxes |
| d. REA: Spousal rights created by federal law |
| e. Plan terms control disposition options |
| f. Special tax treatment for certain people |
| g. Importance of financial planning |
| h. State probate and income tax laws |
| i. Creditors’ rights |
| j. Plan-owned life insurance |
| k. Roth retirement plans |
| l. § 72(t): Premature (pre-age 591/2) distributions |
| m. Charitable giving |
| n. Rollovers and plan-to-plan transfers |
| o. Additional duties for executor |
| F. RESOURCES, CHECKLIST, FORM, CHARTS |
| 1. Resources |
| 2. Checklist of Information Needed from Client |
| 3. Master Beneficiary Designation Form: Traditional or Roth IRA |
| 4. Charts |
| a. Estate Planning for Retirement Benefits, in One Page |
| b. The Uniform Lifetime Table |
| c. The Single Life Table |
