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IRA RESCUE The ECLAT Solution

The IRA ?Problem". Large IRAs are often not ?consumed" prior to deathThe combined estate and income taxes can be 65% or more at death.Traditional ?IRA Rescue Plans" utilizing insurance are no longer viable.. Other Taxable Events. Old annuitiesSale of a business or real estateLarge Compensation I

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IRA RESCUE The ECLAT Solution

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    1. IRA RESCUE The ECLAT Solution By Grant Markuson, JD, LLM Markuson Law Group, LLC

    2. The IRA “Problem” Large IRAs are often not “consumed” prior to death The combined estate and income taxes can be 65% or more at death. Traditional “IRA Rescue Plans” utilizing insurance are no longer viable.

    3. Other Taxable Events Old annuities Sale of a business or real estate Large Compensation Issues Buy Sell Agreements Large Corporate Income Issues

    4. Inefficient Charitable Giving Donations are down, endowments have had huge losses, and charities are suffering CRTs don’t work well in a low interest rate environment Charities are skeptical of life insurance oriented programs The only other split interest charitable technique that works today is Charitable Lead Annuity Trusts

    5. Traditional Charitable Lead Annuity Trust (CLAT)

    6. Problems with Traditional Non-Grantor CLATs No charitable deduction upfront Remainder interest is subject to appreciation assumptions Value of remainder interest is uncertain Non-Grantor trusts are taxable Lifetime trusts raise many uncertainties

    7. The Enhanced Charitable Lead Annuity Trust: E-CLAT Trust is a grantor trust Current charitable deduction for the present value of all future payments to charity Trust term is life of grantor Payments to charity are smaller annual payments with larger payment at end of trust Final payment funded with life insurance

    8. The ECLAT Illustrated

    9. The ECLAT Illustrated

    10. The ECLAT Illustrated

    11. The ECLAT Illustrated

    12. The ECLAT Illustrated

    13. The ECLAT Illustrated

    14. ECLAT Benefits Large upfront deduction: 93%=$930,478 No income tax problems due to holding only municipal bonds and life insurance Large remainder interest of at least $2.3 million, at a gift tax value of only $69,522 Certainty as to the payments Flexibility of payment stream: deduction can be raised or lowered depending on need

    15. ECLAT Specifics Upfront deduction is limited to 30% of Adjusted Gross Income (AGI) Unused deduction can be carried forward for five years Grantor does not have to be the insured Payments are fully funded upfront with a large single premium life policy

    16. Who Can Benefit from the ECLAT? All age groups as long as they are insurable Anyone who can use a large charitable deduction Anyone normally setting up an ILIT Anyone who has a charity in their will or trust Anyone who wants to maximize gifting to their heirs

    17. Planning Considerations Survivorship policies can be used to enhance the remainder interest Corporations can be the donor and insure key employees Can be used as a buy-sell or split-dollar alternative

    18. Technical Matters The Treasury Regulations specifically allow non-linear lead payments This is NOT charitable split-dollar: the trust is the sole owner and beneficiary of the policy We created a patent pending algorithm to accurately calculate the present value interest

    19. IRA RESCUE The ECLAT Solution IRS Circular 230 Disclosure To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this document is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.

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