One of the biggest breakthrough in estate planning in the past few years was the creation of a standalone trust instrument for IRAs, 401(k)'s and other retirement assets. This trust strategy, which effectively is described as a "Living Trust for an IRA"SM, was not only created to provide better estate planning options for retirement assets, but the Internal Revenue Service also gave its stamp of approval on the strategy back in 2005.
Estate planning attorney, Philip Kavesh, developed the IRA Inheritance Trust® and has not only drafted hundreds of these trusts for his clients, but he's also tested the strategy through the proper post-death administration of this trust for his clients as well. And now, this unique planning strategy is available for other attorneys across the country as well through our IRA Inheritance Trust® Legal Document Form & Training Package.
What is The IRA Inheritance Trust®?
As more "baby boomers" are retiring and rolling over large 401(k) and other retirement plans to IRAs, proper tax and estate planning for IRAs have become increasingly important.
When an IRA owner becomes age 70 1/2, he or she must soon begin to take required minimum withdrawals ("RMDs") and pay federal and state income taxes on those withdrawals at his or her highest rate brackets (unless the IRA is a "Roth", in which case the withdrawals may be income tax free).
Effective January 1, 2003, the IRS changed its RMD rules, allowing a non-spouse beneficiary (for example, a child) to take or "stretchout" the taxable RMDs over a much longer period, using his or her own life expectancy rather than the shorter life expectancy of the original IRA owner (the parent). This means that money inside an inherited IRA may now compound much longer, tax-deferred.
For example, let's take a child age 45 (at the time of his parent's death) who inherits a $200,000 IRA and withdraws only RMDs. If the IRA grows, from both income and principal appreciation, at the rate of 6% a year, then 30 years later when the child is age 75, the child will have taken over $400,000 in RMDs and still have almost $300,000 left in the IRA to use over his or her later years or pass down to his or her children (the original IRA owner's grandchildren).
To sum it up, the original $200,000 inherited IRA became worth over $700,000 to that family! (And that doesn't include the future value of the RMDs if they're placed into an investment account.) If we assume the IRA will be worth over $200,000 when the owner passes, or will earn a higher rate of annual return, or will go to a younger beneficiary, that IRA may eventually be worth well over $1 Million!
In other words, IRAs may now be a huge part of a family's financial future, perhaps for generations - - and now large IRAs require a higher level of tax and estate planning - - which you can be well-positioned to provide before your competitors do!
Warning: This New IRA Tax "Stretchout" is Not Automatic!
Many IRA owners and their professional advisors “assume” that the IRA beneficiaries will make the right “stretchout” decisions, or at least seek the advisor’s help before they take withdrawals. Unfortunately, we have found, after handling thousands of estates, this is often not the case when the IRA owner dies.
The beneficiaries are not prohibited from withdrawing more than the RMDs and may instead decide to cash out the IRA earlier than required, blowing the stretchout. This happens because beneficiaries are:
- Not aware of the RMD rules and their choices.
- See themselves listed as beneficiaries on an account and immediately transfer it into their own names.
- Go to the custodian asking what to do, are given a check and then immediately cash and deposit it in their own accounts.
- Do what they think (wrongly) is a tax-free rollover to their own IRAs. Just can't wait to get their hands on the IRA money or are influenced by a spouse or some other third-party to grab and spend it!
Yanking the IRA money out too quickly - - resulting in what we call the "blowout" - - may force a family to pay all of the taxes up front and lose over one-third of the IRA's future value - - literally throwing away hundreds of thousands of dollars, or even millions!
Even if the IRA Owner Has Smart, Responsible Beneficiaries and Thinks the "Stretchout" Is Not a Concern, Consider This…
Let’s assume the IRA beneficiary will properly do the RMD “stretchout” and pay the taxes gradually over his or her lifetime. A lot can still go wrong.
When a beneficiary receives an inheritance directly, as is the case when an individual is named directly as the beneficiary of an IRA, his or her inheritance can then be exposed to a number of significant problems:
- The wrong people may later inherit the IRA (the child, as initial beneficiary, could name his or her spouse as next beneficiary and that spouse's next husband or wife or that spouse's children of another marriage could inherit the account!)
- The beneficiary, his or her spouse or children may have poor spending habits (be "spendthrifts"!).
- The beneficiary may lack good money management/investment skills.
- A beneficiary's spouse may take some or all of the IRA in a DIVORCE! (The income tax laws, allowing an IRA transfer in a divorce to be tax-free, actually encourage the spouse to grab it and keep in mind the statistical chance of a divorce is now over 50%!).
- If the beneficiary is too young, elderly or disabled, he or she may not be able to properly manage his or her own affairs - - without unwanted court intervention.
- A beneficiary who now or later in life receives needs-based government benefits (like MediCaid nursing care benefits or supplemental disability income) may not qualify for or lose those benefits.
- In most states (including California), an IRA is not creditor protected and can be grabbed in a lawsuit, even a bogus one that forces a beneficiary to settle.
In other words, an inherited IRA not only needs to take advantage of "stretchout" but needs protection too - - the kind that a trust can provide (which now leads us to the significance of the IRS' approval of our IRA Inheritance Trust® strategy).
The IRS Previously Hasn't Liked Trusts as IRA Beneficiaries - - Until Now!
In its RMD regulations and previous rulings, the IRS has made it very difficult for an IRA inherited through a trust to both qualify for maximum tax “stretchout” using each primary beneficiary’s own life expectancy and also achieve the higher level of asset protection afforded by a trust that may accumulate the RMDs and hold them for future distribution. Generally, one benefit had to be traded off for the other.
The new IRA Inheritance Trust® now permits the IRA owner and his or her family to enjoy maximum “stretchout” and protection benefits at the same time. The protective features of this trust have previously been tested and proven over many years of court decisions. And now, finally, the IRS has approved the income tax “stretchout” feature as well (see PLR 200537044). This new standalone IRA beneficiary trust is not the “garden variety” that has existed for some time, but rather represents a huge breakthrough. The IRA Inheritance Trust® is the most advanced “next generation” trust that solves many earlier, tricky drafting problems associated with maximizing both the stretchout and protection benefits.
Pension Protection Act of 2006 Makes the IRA Inheritance Trust® Even Better!
Effective January 1, 2007, the Pension Protection Act (PPA) significantly widened the application of the IRA Inheritance Trust® to people who may never have considered this valuable planning tool before.
Previously, this Trust had no application to a company retirement plan - - 401(k), 403(a), 403(b), 457, pension or profit-sharing plan, etc. - - unless and until the worker/participant reached normal retirement age and took an “in service” distribution or retired, and then rolled over the company plan into an IRA. The reason why is that company plans’ own rules usually forced a non-spouse beneficiary to take the entire taxable distribution in 1 to 5 years, overriding the income tax “stretchout” rules available to IRAs.
Now, if someone has more than $150,000 in company plans, is still working but has not reached normal retirement age, or has retired but left these moneys in the company plan, this plan participant can take advantage of the stretchout and protection benefits for his or her family available through the IRA Inheritance Trust®.
The PPA permits non-spouse beneficiaries of company plans, or a Trust established on the beneficiaries’ behalf, to do a rollover into an “inherited IRA” after the plan participant passes away. In other words, a company plan participant can set up the IRA Inheritance Trust® now, make it the beneficiary of the plan and let the IRA rollover occur later!
If you haven’t seriously considered the IRA Inheritance Trust® for a client because he or she is still working, or has retired but still has money in the company plan, you definitely need to look into it right away!
Who Should Get an IRA Inheritance Trust®?
For anyone who has IRAs (including those owned by his or her spouse) and/or 401(k) or other retirement plans that total over $200,000 - - this IRA Inheritance Trust® is virtually a "no-brainer" decision.
Simply stated, the income tax reduction and asset protection planning that this trust now provides may save a million dollars or more for that IRA owner’s (or retirement plan participant's) family!
You, the Advisor, Wins Big Too!
If you're an estate planning attorney, this unique product can easily fit into your Living Trust-centered practice. And, with proper marketing - - to existing clients, referral sources and the public - - the IRA Inheritance Trust® can quickly become your best-selling new estate planning product since the 80's and 90's heyday of the Living Trust!
If you're a financial advisor or insurance professional, this "fresh", IRS-approved strategy is just the edge you've been looking for - - that can set you apart, attract high net worth prospects and help you close more business!
Consider all these various ways you, as the financial advisor or insurance professional, can help the large IRA owners who will meet with you to discuss this trust strategy:
- Reposition IRA investments to emphasize more growth, in order to take advantage of maximum "stretchout" (Note: New equity indexed annuities and variable annuity products with "living benefit" and "enhanced death benefit" features are particularly attractive options!).
- Obtain life insurance to "super-charge" the "stretchout" (the owner's grandchildren, with longer life expectancies, get the IRA and the children get the insurance proceeds tax-free).
- Get retirees to finally roll out their 401(k)'s and other company retirement plans into IRAs and help them do "stretchout" planning (although the Pension Protection Act of 2006 now allows post-death rollovers and many 401(k)'s and other plans must be amended to take advantage of this Act and doing the rollover now guarantees the stretchout will be available!).
- Capture large IRA owners' overall financial planning (by getting your "foot in the door" when you help them file their new, special beneficiary designation form, necessary to implement the Trust, with the custodian).
Be the Qualified Professional Advisor People Will Seek!
All advisors are not necessarily skilled in the complex areas of RMD rules, estate planning and asset protection. The Law Firm of Kavesh, Minor & Otis, the creators of the IRA Inheritance Trust®, through its affiliated company, The Ultimate Estate Planner, Inc. has available all of the technical training, trust document forms and seminar marketing materials you will need to begin implementing this trust strategy into your practice and quantum leap your business! No territorial exclusives are being granted, so act right away before your competitors do!
Articles & Resources
Below are a number of related articles to the IRA Inheritance Trust® and the standalone IRA Beneficiary Trust strategy. These articles are being distributed to you with permission from the author and/or publishers for your professional review and reference only. Any other use of these articles, such as distribution to others or your clients, is strictly prohibited without the advanced express consent of the respective publishers.
What's included in The IRA Inheritance Trust® Legal Document Form & Training Package?
The IRA Inheritance Trust® Legal Document Form & Training Package comes with the following items:
- Data CD-ROM containing the following modifiable documents:
- IRA Inheritance Trust® Legal Document Form (for both married and single clients) - Updated February 2013
- IRA Inheritance Trust® Beneficiary Designation Form
- IRA Inheritance Trust® Color Flow Chart
- IRA Inheritance Trust® Certification
- IRA Inheritance Trust® Disclosure Statement
- IRA Inheritance Trust® Planning Checklist & Intake Form
- Special Needs Trust language for the IRA Inheritance Trust®
- Amendments to the Revocable Living Trust Document (for the IRA Inheritance Trust®)
- Trust Review Checklist and Other Ancillary Legal Documents
- Table of Contents and other Manual inserts
- Technical Training Module, including:
- A 2.5 Hour Technical Training DVD
- IRA Inheritance Trust® FAQ's
- IRA Inheritance Trust® Guidelines for Use
- Various Articles, PLRs & Resources
- Sample Beneficiary Designation Forms & Custodian Hold Harmless Language
- Sample binder of the complete document assembled so you can see how Mr. Kavesh's law firm packages and delivers this unique trust to his clients.
All of the legal document forms come in a modifiable Microsoft Word format for you to be able to easily modify, edit and assemble (or add to your existing word processing software). NOTE: This is NOT a software program and there are no automated/macro-type functions with our forms. While drafted for Mr. Kavesh's law firm based out of California, this strategy is based on federal law and has applicability to all states.
Benefits of Our Package
We know that you have a lot of options when choosing which legal document forms to use in your practice, but here are just a few reasons you may wish to choose our IRA Inheritance Trust® Legal Document Form & Training Package for your practice.
- A one-time (reasonable) licensing fee. We don't charge any on-going membership fees and we realize that our document form comes in a very "bare bones" format of Microsoft Word, as it is not a software program, which is why we're able to keep our fees so low.
- Use of the federally trademarked IRA Inheritance Trust® name. Mr. Kavesh's law firm, Kavesh, Minor & Otis, has taken the time and expense of actually federally trademarking the name "IRA Inheritance Trust®". The purchase of our IRA Inheritance Trust® Legal Document Form & Training Package includes the rights to be able to use the federally trademarked name (under proper restrictions and guidance), which gives you additional third-party authority and the ability to tout the next benefit...
- The IRA Inheritance Trust® is the actual trust that was reviewed by the IRS to positively rule on this concept. Mr. Kavesh's law firm worked closely with Robert Keebler to get the IRS to approve the standalone IRA Beneficiary Trust strategy in September 2005 utilizing Mr. Kavesh's law firm's IRA Inheritance Trust® (see PLR 200537044 ). This positive ruling by the IRS of the IRA Inheritance Trust® document and your use of the federally trademarked IRA Inheritance Trust® name gives you a very unique marketing advantage over your other competitors!
- No territorial exclusives. We don't provide people territory exclusives, which means that just about any licensed attorney can get the IRA Inheritance Trust® to use in his or her estate planning practice - - all the more reason you should get this package before your nearby competitors do!
- Sophisticated Trust Protector, Toggle Switch & Asset Protection Features. One of the unique aspects that we have in our legal document form has to do with its trust protector, toggle switch and asset protection provisions. We stand by our document form when we say that no other legal document form for a standalone IRA Beneficiary Trust has been able to compete with the kind of provisions included in the IRA Inheritance Trust®. We know of several attorneys who spend thousands of dollars for software licensing each year that have opted to license our form instead because of its unique features and so that they can provide their clients the best quality of legal planning available in this area. Even if you already have a standalone IRA Beneficiary Trust that you're using, you can utilize this package to enhance and upgrade your current form.
- Technical Training & On-Going Support. The 2.5 hour technical training included in this package will help you understand the technical and drafting issues surrounding this type of trust. Taken from an actual attorney training given by Mr. Kavesh to his associate attorneys, this technical training is an invaluable resource for anyone looking to draft standalone IRA Beneficiary Trusts. Additionally, we are always available for any of your questions or planning issues that you may run into. (NOTE: For an additional fee, Mr. Kavesh's law firm currently provides personalized one-on-one support for law firms who purchase our IRA Inheritance Trust® Legal Document Form & Training Package.)
Below you will find testimonials of actual estate planning professionals throughout the country that are currently utilizing the IRA Inheritance Trust® in their practices.
NOTE: The testimonials above are from actual customers of The Ultimate Estate Planner, Inc. These testimonials do not warrant, guarantee or predict your personal results. The Personal Asset TrustSM is sold separately. All Marketing Packages are also available and sold separately.
Related Products & Training
Below are some related products and trainings that are complementary to our IRA Inheritance Trust® Legal Document Form & Training Package.
The regular price of our IRA Inheritance Trust® Legal Document Form & Training Package is a one-time licensing fee of just $1,495—NOTE: If you purchase before December 31, 2013, you will automatically receive the January 2014 Update.
As you can see, with the sale of just one of these trusts, you can easily make back the cost of this package - - and then some!
For your convenience, you can purchase the IRA Inheritance Trust® Legal Document Form & Training Package from one of the following two ways.
Online: It's fast, safe and convenient!
By Phone: Call us at 1-866-754-6477
NOTE: Sales tax is only applicable to California purchasers. Some LA and Orange County attorneys may be sold portions of this package. For more information, call 1-866-754-6477.
Five Benefits of Choosing Ultimate Estate Planner Products
When it comes to products to help your estate planning practice, we know that you have a lot of choices available. Here are just five benefits of choosing products with The Ultimate Estate Planner, Inc.
- Proven & Tested - One of the best things about our products is that all of our products have been proven and tested to actually work. Our products are developed by our President, Philip J. Kavesh, for the purpose of marketing his own law practice. He has put the rubber to the road, so that you can be confident that you're purchasing products that aren't just based on theory, but on what actually works!
- Customer Service & Support - We aren't a large company and pride ourselves in providing the best customer service and support available. You won't be forwarded to someone outside of the country. You won't be left on hold, wasting precious minutes of your time. You won't have to speak to different or multiple people every time you call us. We want you to succeed and our goal is to see you to your success! We are open Monday through Friday from 8:30am to 5pm Pacific Time and return phone calls and e-mails within less than 24 business hours at all times.
- No Annual Licensing Fees or Membership Contracts - All of our products are sold with one-time licensing fees, so you don't have to get locked into long-term contracts with penalties and other limitations that prevent you from continuing to use your invested money.
- Customizable Plans & Flexibility - We know that times are tough and cash flow can be an issue for many estate planners today. This is why we want to work with you and help you customize your product selection and work with you and your budget. No practice or budget is too small for us, because we understand that every estate planner has to start somewhere and we'd love for you to start your estate planning practice with us (or improve the one you've already started).
- 100% Money Back Guarantee - It is important to us that you are happy with your purchase with us and we stand behind all of our products with such confidence that we back it up with a 100% Money Back Guarantee. If you are not happy with your purchase, call our office and we will immediately help you--whether it's assisting you with the implementation of a product, helping you identify another product or refunding your money in full. So now you can browse our website and know that all of the risk is on us!