Vast amounts of wealth are held in individual retirement accounts, 401(k) plans and other retirement plans. The importance of proper estate planning for such retirement benefits was recently illustrated in private letter ruling 201021038. In this ruling, the Internal Revenue Service rejected a post-mortem reformation of a trust and concluded that the designated beneficiary of an IRA must be identifiable on the IRA owner’s date of death.
There are many reasons that it may be advisable to fund trusts with retirement assets. For example, a trust can be used to optimize a decedent’s exemption from federal and New Jersey estate taxes. Under current law, beginning on January 1, 2011, the exemption from federal estate tax will be $1,000,000 and the exemption from New Jersey estate tax will be $675,000. A trust could be designated as the beneficiary of retirement benefits to use such exemptions. In addition, trusts can be helpful in protecting children or grandchildren who may have spendthrift tendencies.
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.
For questions call 1-877-256-2472 or contact us at [email protected]
