1 / 18

Estate Planning – Retirement Benefits

Estate Planning – Retirement Benefits. The Nuts & Bolts Rules. Introduction to Estate Taxes Unlimited Marital Deduction Exemption amounts (Unified Credit). Federal Exemption Amounts & Rates. Economic Growth Tax Revenue & Recovery Act of 2001. * Reflecting repeal of the 5% surtax

richman
Download Presentation

Estate Planning – Retirement Benefits

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Estate Planning – Retirement Benefits

  2. The Nuts & Bolts Rules • Introduction to Estate Taxes • Unlimited Marital Deduction • Exemption amounts (Unified Credit)

  3. FederalExemption Amounts & Rates Economic Growth Tax Revenue & Recovery Act of 2001 * Reflecting repeal of the 5% surtax ** The GST Exemption will be as indexed for inflation. IRC § 2631(c).

  4. State Exemption Amounts Comparison of Federal & Massachusetts Exemptions YearMass. ExemptionFederal Exemption 2003 $700,000 $1 million 2004 $850,000 $1.5 million 2005 $950,000 $1.5 million 2006 $1 million $2 million 2007 $1 million $2 million 2008 $1 million $2 million 2009 $1 million $3.5 million 2010 $1 million No Federal Estate Tax 2011 $1 million $1 million

  5. • IRAs are subject to double taxation Referred to as “Hot Assets” Assume IRA of $5,000,000 Estate tax is $2,500,000 (@50%) Income Tax on the balance is $1,125,000 (@45%) • Net after taxes $1,375,000 • Only 27.5% remains after taxes HotAssets

  6. Solutions • Leave IRA to the University upon death • Simply change the beneficiary designation • No estate tax or income taxes • $5,000,000 goes to the University instead of $3,625,000 to the Government (one charity is much better than the other) • Cost to the family is only $1,375,000 • In many situations, Donor will purchase life insurance for $1,500,000 in trust for children to replace after tax amount family would have otherwise received.

  7. MarriedCouples with Large IRAs • Consider using Charitable Remainder Trusts to provide income to the spouse for his/her life. • Any funds remaining will go to the University upon the second death • Great for couples with no children • Donor can control final destination of funds to University rather than relying on the surviving spouse to leave funds to University

  8. Steps • Establish Charitable Remainder Trust NOW (CRT) • Designate CRT as beneficiary of IRA (rather than the spouse) • Upon death, the IRA is paid over to CRT • CRT pays fixed percentage of assets to spouse for his/her life each year • Income interest for spouse is eligible for marital deduction so no estate taxes are due on either death

More Related