Bulletin Regarding Retirement Assets

Large portions of clients’ estates frequently consist of retirement assets. It is crucial that clients give proper attention to these assets.

The laws that govern retirement assets were designed to provide tax deferred methods to provide for taxpayers’ retirements. However, if we are not careful, more than 70% of these assets can be lost to estate and income taxes after death. Income taxes can be reduced by deferring distributions over the longest permissible period of time. Thus, one objective is to “stretch” distributions to enhance the transfer of wealth to loved ones.

The other major objective is protection. How many 18 year olds will wait to take inherited retirement proceeds over their lifetimes? Clients want to protect their loved ones in the event of disability, and they want to protect them from divorce, predators, and bankruptcy. Thus, they want to control income and asset distributions while effectively using their Unified Credit and GST exemptions. Recent rulings now enable us to take advantage of the stretches, provide estate tax & GST planning, and provide protection through the use of well-grounded & easy to implement tools.

You should determine if these tools are appropriate for you. What are your estate planning objectives? How do your retirement assets coordinate with your estate plan? Who are the primary and contingent beneficiaries of your retirement assets? How are your beneficiary designations worded as filed with your account custodians? Have you named a trust as a beneficiary of any of your retirement assets? Please note that many trusts will not qualify as designated beneficiaries!

This information was prepared by Lena Barnett & Associates, LLC and is intended only to provide general information. It is neither offered nor intended for use as legal advice,
nor is it a substitute for a consultation with an attorney.

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