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How Does Arizona Stack Up as a Retirement Destination?

By | Retirement Planning | No Comments

retirementPlanning for your retirement should begin as soon as you enter the workforce. Initially, your retirement plan is likely to be nothing more than a designated savings account or retirement account. Over the years, that plan will grow and become more detailed and complex. One of the most important factors affecting your retirement plan is your choice of retirement location. Whether you currently live in the State of Arizona, or are only thinking about retiring to Arizona, the recent WalletHub Survey on retirement states may shed some light on how Arizona stacks up as a retirement location.

Arizona – A Popular Retirement Destination

Deciding where to live when you retire is one of the most important decisions you will ever make. After all, you will likely spend a quarter of your life in your chosen destination. Many factors go into deciding where to live during your Golden Years, including friends and family, weather, the cost of living, and the availability of services for the elderly. The State of Arizona has long been a popular retirement destination, due in large part to the yearly sunshine, warm weather, and lack of humidity. In fact, many developers have designed new communities specifically with retirees in mind throughout the State of Arizona. Therefore, if you are considering Arizona as your retirement destination you are hardly alone. Is Arizona really as great a location as many people appear to believe though? A recent survey by WalletHub may help answer that question.

The WalletHub Study

WalletHub conducted a study of all 50 states in an effort to determine which states are the best and which are the worst for retirees.  They compared the 50 states across 41 key indicators of retirement-friendliness. Their analysis examined affordability, health-related factors, and overall quality of life. Each metric was graded on a 100-point scale, with a score of 100 representing the most favorable conditions for retirement. Each state received an overall score and ranking for each of the three broad categories – affordability, health care, and quality of life. The overall “winner” was – not surprisingly – the State of Florida with a combined score of 66.79 followed closely by Colorado with 66.17 and then South Dakota with 65.89 points. Interestingly, both the second and third place “winners” are states that are not known for having warm nor dry climates.  At the very bottom of the rankings, you will find Rhode Island, New Jersey, and in last place, was Kentucky with 43.06 points.

How Did Arizona Do?

Arizona has long been a popular retirement destination. If you are thinking of making it your retirement location, you might be interested to know how the state stacked up in the study. Overall, Arizona came in as the 10th best state for retirees with a total score of 60.67. Arizona ranked 21st in both the “affordability” and the “quality of life” categories. The state fared a bit better in the “health care” category where it came in number 17. Interestingly, Arizona ranked 48th in the sub-category of “lowest percentage of workforce over age 65.”

Retirement Planning

Whether you stick with Arizona as your retirement destination of choice, or change your plans, the best thing you can do now for a worry-free retirement later is to create a well thought out retirement plan that works in harmony with your existing estate plan. To make sure your plans reflect your needs and wishes for your Golden Years, sit down with your estate planning attorney in the near future and coordinate your two plans.

Contact an Arizona Retirement Planning Attorney

For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns about retirement planning, contact the experienced Arizona retirement planning attorneys at Morris Hall PLLC by calling 888-222-1328 to schedule your appointment today.

for your retirement should begin as soon as you enter the workforce. Initially, your retirement plan is likely to be nothing more than a designated savings account or retirement account. Over the years, that plan will grow and become more detailed and complex. One of the most important factors affecting your retirement plan is your choice of retirement location. Whether you currently live in the State of Arizona, or are only thinking about retiring to Arizona, the recent Wallet Hub Survey on retirement states may shed some light on how Arizona stacks up as a retirement location.

Arizona – A Popular Retirement Destination

Deciding where to live when you retire is one of the most important decisions you will ever make. After all, you will likely spend a quarter of your life in your chosen destination. Many factors go into deciding where to live during your Golden Years, including friends and family, weather, the cost of living, and the availability of services for the elderly. The State of Arizona has long been a popular retirement destination, due in large part to the year around sunshine, warm weather, and lack of humidity. In fact, many developers have designed new communities specifically with retirees in mind throughout the State of Arizona. Therefore, if you are considering Arizona as your retirement destination you are hardly alone. Is Arizona really as great a location as many people appear to believe though? A recent survey by Wallet Hub may help answer that question.

The Wallet Hub Study

WalletHub conducted a study of all 50 states in an effort to determine which states are the best and which are the worst for retirees.  They compared the 50 states across 41 key indicators of retirement-friendliness. Their analysis examined affordability, health-related factors, and overall quality of life. Each metric was graded on a 100-point scale, with a score of 100 representing the most favorable conditions for retirement. Each state received an overall score and ranking for each of the three broad categories – affordability, health care, and quality of life. The overall “winner” was – not surprisingly – the State of Florida with a combined score of 66.79 followed closely by Colorado with 66.17 and then South Dakota with 65.89 points. Interestingly, both the second and third place “winners” are states that are not known for having warm nor dry climates.  At the very bottom of the rankings, you will find Rhode Island, New Jersey, and in last place, was Kentucky with 43.06 points.

How Did Arizona Do?

Arizona has long been a popular retirement destination. If you are thinking of making it your retirement location, you might be interested to know how the state stacked up in the study. Overall, Arizona came in as the 10th best state for retirees with a total score of 60.67. Arizona ranked 21st in both the “affordability” and the “quality of life” categories. The state fared a bit better in the “health care” category where it came in number 17. Interestingly, Arizona ranked 48th in the sub-category of “lowest percentage of workforce over age 65.”

Retirement Planning

Whether you stick with Arizona as your retirement destination of choice, or change your plans, the best thing you can do now for a worry-free retirement later is to create a well thought out retirement plan that works in harmony with your existing estate plan. To make sure your plans reflect your needs and wishes for your Golden Years, sit down with your estate planning attorney in the near future and coordinate your two plans.

Contact an Arizona Retirement Planning Attorney

For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns about retirement planning, contact the experienced Arizona retirement planning attorneys at Morris Hall PLLC by calling 888-222-1328 to schedule your appointment today.

Could You Become Too Affluent for Social Security?

By | Financial Planning, Other, Retirement Planning | 6 Comments

Social Security has been in our country since 1935, and for some, a resource that has been counted upon at retirement.  Currently there is consideration being given to reducing the amount of Social Security that is paid out.  Congress is evaluating the use of a means test to do so.   No one knows if means testing will become a reality, but the discussions that are taking place warrant further exploration and understanding.

A means test is simply a process of looking at income, and based on certain criteria, determines if social security is needed.  For example, one plan being considered would reduce Social Security by $1,000 per month, for every $1,000 of income that is non-Social Security income received over $55,000.

The idea of the means test was originally based upon some language found in the 2015 US budget proposal. The proposal was aimed toward reducing the aggressive Social Security claims, occurring when some are claiming benefits.

A means test could have the greatest impact on those in the middle class.  Hardworking individuals, professionals, and small business owners could be hurt significantly by this proposed evaluation.

The facts are, we do not know if and when means testing will actually be enacted.  The best solution however, is to plan now.   Start saving and protecting your investments for the future.  Morris Hall can help with that process.  We're happy to discuss this with you and advise as to the best processes and procedures and a way to hold your investments, as well as how to invest them.
dan-morris Contributed by Morris Hall PLLC Phoenix Estate Planning Attorney and Senior Partner Dan R. Morris.

What Morris Hall, PLLC can do for you:
The attorneys at Morris Hall have hundreds of years of combined experience, ensuring that families’ assets are protected from probate, unnecessary taxes, creditors, ex-spouses and Medicaid spend-down.  Our Arizona offices are located in Phoenix, Mesa, Scottsdale, Carefree, Tucson, Oro Valley, Green Valley, Prescott, Sedona, Flagstaff and Arrowhead.
Our New Mexico offices are located in Albuquerque, Las Cruces and Santa Fe.  Contact us today at 888.222.1328 to schedule an appointment!

This blog should be used for informational purposes only.  It does not create an attorney-client relationship with any reader and should not be construed as legal advice.  If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.

2015 IRA Contribution Limits

By | Estate Planning, Retirement Planning | No Comments

As the months of 2015 wisp away, now is a good time to think about what you or your loved ones have put away for tomorrow.  Saving for retirement should be a big goal for everyone.  And the earlier you start (or encourage your kids and grandkids to start), the more financially stable your retirement years will be.  I recently read an article that showed how much more a person would have at age 65 if they had contributed $2000 a year starting at 18 and ending at age 24, versus a person who started contributing the same $2000 at age 24, and continued contributing each year until age 65 – it was nearly a $1 million difference (the growth of the investments were presumed to be the same).

I do realize that the 18 year boat has sailed for most of us, but this is good to help urge the younger members of your family.  The IRS does limit how much you can put away for retirement, so you need to understand the limits in doing so.

There are several different thresholds to consider.  This year, the limit to contribute into your IRA or Roth IRA is unchanged at $5,500.  In addition, for those like me who are over age 50, there is a “catch-up” provision that also remains unchanged at $1,000.  For employees who participate in a 401(k), 403(b) and most 457 plans, the contribution limit is increased to $18,000 for 2015. That is good news to those that are able to contribute at the maximum level.   More good news for us older folk, the catch-up contribution for employees aged 50 and over has increased to $6,000.

The IRS also places restrictions on the deductibility of traditional IRA contributions.  2015 introduces some changes to the deductibility. The deduction begins to be phased out for single taxpayers and heads of household who are also covered by a work place retirement plan (e.g. 401(k)), and have a modified adjust gross income (“MAGI”) between $61,000 and $71,000.  If you are married and filing jointly and the spouse who makes the IRA contribution is also covered by a work place retirement plan, the deduction phase-out begins with MAGI $98,000 to $118,000.  For a married individual who files a separate return and who is also covered by a work place retirement plan, the phase-out range remains at the low income levels of $0 and $10,000.

Saving for retirement is important.  And there are important levels to understand based on many variables.  Understanding your contribution limits or restrictions is an important piece you’re your future planning.  The Morris Hall team understands these hurdles, and has put legal, financial and accounting in place to help you make the best choices.

At Morris Hall, PLLC we have focused our legal practice on estate planning for over 45 years.  Along with estate planning, our attorneys help clients and their families with matters of probate, trust administration, wills, power of attorneys, business planning, succession planning, legacy planning, charitable gifting and other important legal aspects.  We also have divisions in financial, real estate and accounting to help you incorporate all of your planning together, ensuring that everything works perfectly for your needs and situation. Our Arizona offices are located in Phoenix, Mesa, Scottsdale, Carefree, Tucson, Oro Valley, Prescott, Sedona, Flagstaff and Arrowhead.  Our New Mexico offices are located in Albuquerque, Las Cruces and Santa Fe.  Contact us today at 888.222.1328 to schedule an appointment!

This blog should be used for informational purposes only.  It does not create an attorney-client relationship with any reader and should not be construed as legal advice.  If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.

 

Self-Directed IRAs – the Lurking Danger

By | E-Alert, Retirement Planning | No Comments

IRAs are a great way to defer current income tax into the future.  By contributing to your IRA, the amount contributed is not taxed today.  The tax is deferred until the time you start withdrawing (Currently the government forces a withdrawal when you are 70 ½ years old).

The government likes that you are saving for your golden years, so there are statutes that limit the ability of a creditor (bankruptcy or lawsuit) to reach into your IRA to satisfy your debt.  That is a good thing!

However, those of you who have decided to utilize a self-directed IRA may not realize that those protections may not be there.  The statutes don’t go away; however, if the investments you make have a liability risk, the fact that the investment is in an IRA does not shield the asset, and potentially you personally, from that risk.

For example, if you decide to use your Self-Directed IRA to purchase a rental home, the risk that the tenant, or a visitor of the tenant, sues you lurks.  If that tenant slips and falls due to your negligence as a landlord, the fact that the investment is in your IRA does not prevent the prevailing tenant from getting at the rental home.  Further, there are arguments that the tenant, if the rental home asset is not enough, can reach to your personal assets to satisfy the claim.

There are ways to avoid those risks.  Protecting your investments through the use of a Limited Liability Company (LLC) is a good way to reduce your exposure to those lawsuits.

Come in and talk with one of our estate planning attorneys to see what is the best structure for your investments.

 

jim-plitz Contributed by Morris Hall, PLLC Albuquerque, Santa Fe and Las Cruces Estate Planning Attorney and Partner,

James  P. Plitz.

 

 About Morris Hall, PLLC:
At Morris Hall, we have focused our legal practice on estate planning for over 45 years.  Along with estate planning, our attorneys help clients and their families with matters of probate, trust administration, wills, power of attorneys, business planning, succession planning, legacy planning, charitable gifting and other important legal aspects.   We also have divisions in financial, real estate and accounting to help you incorporate all of your planning together, ensuring that everything works perfectly for your needs and situation. Our Arizona offices are located in Phoenix, Mesa,  Scottsdale, Carefree, Tucson, Oro Valley, Prescott, Flagstaff and Arrowhead.  Our New Mexico offices are located in  Albuquerque, Las Cruces and Santa Fe.  Contact us today at 888.222.1328 to schedule an appointment!

This blog should be used for informational purposes only.  It does not create an attorney-client relationship with any reader and should not be construed as legal advice.  If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.

What did the Supreme Court just do to my IRA?

By | Estate Planning, Retirement Planning | No Comments

Many of us have retirement accounts, such as IRAs, 401ks and 403bs. The retirement accounts might very well be the largest assets we have, and they can grow income tax free. It is because of the tremendous potential for growth in these assets that we should spend particular time and attention to plan for what happens to them when we die.

Most of us desire to leave a legacy. The United States Supreme Court just took a bite out of our ability to protect the legacy we are all striving to leave behind. In a unanimous decision the Court ruled in Clark v Rameker that when an IRA owner dies and leaves the retirement account behind to a loved one it might no longer be protected. Anyone who has an IRA not only has to worry about the tax implications of their IRA when they pass, but also must take steps to ensure that the asset that could be a significant portion of the estate, will be protected from potential creditors of their beneficiaries.

 

With potentially very significant negative tax implications, combined with the loss of asset protection, and the ever looming threats from Washington, it is now more important than ever to update your estate plan to ensure that your retirement accounts are protected. At this stage, procrastination is a very dangerous option.

Cave Creek, Arizona Estate Planning Attorney West HunsakerContributed by MH Carefree, Phoenix and Flagstaff Estate Planning Attorney, B. West Hunsaker.

Why Choose Morris Hall:
You have a number of options when it comes to estate planning, so why pick Morris Hall?  First off, estate planning and asset protection are a very complicated endeavor and you should only trust someone who focuses exclusively on those matters.  Also, MH is a proud member of The American Academy of Estate Planning Attorneys (AAEPA) which provides us additional support, advanced training, tools and information that is not available to others – which means that we can better protect your assets and your loved ones.  We are one of only two firms in Arizona that belong to the AAEPA and are the only firm in New Mexico that has been granted membership.  If you have assets and loved ones that you want to protect, you are in good hands with MH.  Contact us today at 888.222.1328 to schedule an appointment!

This blog should be used for informational purposes only.  It does not create an attorney-client relationship with any reader and should not be construed as legal advice.  If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation

 

What Just Happened to Your IRA?

By | Estate Planning, Retirement Planning | No Comments

On June 12, 2014, a unanimous decision by the US Supreme Court forever changed how Americans need to plan for their IRAs.  The precedent setting case of Clark v Rameker has clearly established that once an IRA is inherited, it is no longer considered a “retirement” asset and is therefore not protected under the US Bankruptcy Code.  This leads us to question what other protections will not be available through an IRA, such as judgment, creditors and ex-spouses.

Passing on your IRA is no longer as simple as listing your loved ones on the beneficiary form.  Without additional effective planning some of your most significant assets will most likely be exposed and unprotected.  Fortunately, there are advanced estate planning tools available to provide asset protection for a beneficiary, while still allowing the significant tax advantages of stretching the IRA.  These tools are a Qualified Living Trust and a Stand Alone IRA Trust.

It is important to note that beneficiaries who live in Arizona do have some protections that were not lost as a result of the Supreme Court’s decision.  Arizona opted out of the Federal Bankruptcy scheme upon which this case was based.  Notwithstanding the level of protection provided if your beneficiary lives in Arizona, is still best to leave your IRA in a trust for them.  If you have beneficiaries who do not live in Arizona, or may move out of Arizona, your estate plan definitely needs to be updated to include protection for your IRA.  It is not very often that we get a unanimous decision from the Supreme Court.  This will most certainly lead to future challenges to inherited IRAs.  Unfortunately, not every practitioner understands the complexities of creating or maintaining a qualified trust or a stand alone IRA trust.  It is increasingly important to have your plan reviewed by an experienced estate planner who understands these very complicated issues.

Cave Creek, Arizona Estate Planning Attorney West HunsakerContributed by MH Cave Creek, Phoenix and Flagstaff Estate Planning Attorney, B. West Hunsaker.

About Morris Hall:
At Morris Hall, we have focused our legal practice on estate planning for over 40 years.  Along with estate planning, our attorneys help clients and their families with matters of probate, trust administration, wills, power of attorneys, business planning, succession planning, legacy planning, charitable gifting and other important legal aspects.  We also have divisions in financial, real estate and accounting to help you incorporate all of your planning together, ensuring that everything works perfectly for your needs and situation. Our Arizona offices are located in Phoenix, Mesa, Scottsdale, Cave Creek, Tucson, Prescott, Flagstaff and Arrowhead.  Our New Mexico offices are located in Albuquerque, Las Cruces and Santa Fe.  Contact us today at 888.222.1328 to schedule an appointment!

This blog should be used for informational purposes only.  It does not create an attorney-client relationship with any reader and should not be construed as legal advice.  If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.

Unanimous Decision by the United States Supreme Court Rejects Protection of Inherited IRA’s:

By | Estate Planning, Estate taxes, Other, Retirement Planning, Seminar announcement | No Comments

The Supreme Court in a unanimous decision written by Justice Sotomayor made it clear that inherited IRA’s are not protected from creditors under the Federal Bankruptcy Code. In the opinion the Court found that Heidi Heffron-Clark, who inherited an IRA from her deceased mother in 2001, and then filed for bankruptcy 9 years later, could not shield her inherited IRA from her creditors.

The Court focused on the interpretation of the term “retirement funds.” The Court interpreted the meaning of “retirement funds” under Section 522(b)(3)(c) to mean sums of money set aside for the day an individual stops working. The Court went on to say: “…we look to the legal characteristics of the account in which the funds are held, asking whether, as an objective matter, the account is one set aside for the day when an individual stops working.”

The Court said that there were three legal characteristics of an inherited IRA that make it so an inherited IRA is not what was meant by a “retirement fund” under the US Bankruptcy Code.  The three characteristics are:

1)      The holder of an IRA may never invest additional money into the account

2)      Holders of an inherited IRA must withdraw money from the retirement account, no matter how many years from retirement they may be.

3)      The holder of an inherited IRA may withdraw the funds at any time without penalty

The Court went on to expound upon how these three characteristics of an inherited IRA make it so that an inherited IRA is substantially different from a traditional or Roth IRA, and because of these differences an inherited IRA was not meant to be an exempt asset under the Bankruptcy Code. The Court further went on to say that the purpose of the exemptions in the Code are to protect the debtor’s essential needs. The Court said, Allowing debtors to protect funds held in traditional and Roth IRAs comports with this purpose by helping to ensure that debtors will be able to meet their basic needs during their retirement years. “

“The same cannot be said of an inherited IRA. For if an individual is allowed to exempt an inherited IRA from her bankruptcy estate, nothing about the inherited IRA’s legal characteristics would prevent (or even discourage) the individual from using the entire balance of the account on a vacation home or sports car immediately after her bankruptcy proceedings are complete.”

Due to this unanimous decision by the United States Supreme Court it is now more important than ever to make sure that your estate plan is set up properly to ensure the greatest amount of protection for your IRA. With qualified estate planning trusts your IRA can be protected for your loved ones, despite this most recent ruling. Have your estate plan reviewed by an experienced estate planning attorney that understands these very complicated issues and they will show you how they can protect what the government won’t.

Scottsdale and Glendale Estate Planning Lawyer David Eastman - VA Accredited AttorneyContributed by MH Phoenix, Arrowhead and Scottsdale Estate Planning Attorney and Partner, David T. Eastman.

What the Attorneys of Morris Hall Can Do For You:
The attorneys at Morris Hall have 100’s of years of combined experience ensuring that families’ assets are protected from probate, unnecessary taxes, creditors, ex-spouses and Medicaid spend-down.  The attorneys also help those in Arizona and New Mexico to apply for and receive Medicaid assistance and Veterans Benefits.  Our Arizona offices are located in Phoenix, Mesa, Scottsdale, Cave Creek, Tucson, Prescott, Flagstaff and Arrowhead.  Our New Mexico offices are located in Albuquerque, Las Cruces and Santa Fe.  Contact us today at 888.222.1328 to schedule an appointment!

This blog should be used for informational purposes only.  It does not create an attorney-client relationship with any reader and should not be construed as legal advice.  If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.

Don’t Rely on an Inheritance to Secure Your Financial Future

By | Estate Planning, Estate taxes, Retirement Planning | No Comments

It is not often that you hear this, but some people might not be concerned about their retirement. Why? Perhaps they are expecting an inheritance and feel that any additional planning is unwarranted.   Relying on a possible inheritance from your parents or other relatives to fund your retirement should not be your only plan of action.

Before you start counting your dollars, first ask yourself, ‘Do I really know if I am going to receive anything?’   Are you truly listed as the beneficiary on the estate plan?  Unless it is directly spelled out in an estate plan, by Arizona law, parents are not required to include their children as beneficiaries of their estate.  Many clients leave their estate solely to their children and grandchildren. However, parents can choose to leave their estate to others, such as charities, friends and distant family members.  From time to time, clients feel that charities are more deserving of their estate than their children.

In addition to the issue of whether or not you are a beneficiary under a parents’ estate, the issue as to the extent of the inheritance should be looked at as well.  The reality is that many individuals do not pass on an estate.  With the rise in long term care costs, many individuals spend the majority of their wealth prior to death.  In the case that there is an estate left, you should be aware that the median inheritance is around $64,000, according Boston College Center for Retirement Research.  Now, $64,000 is a significant number, however it is not enough to fund an individual’s retirement.

Good planning should not include relying upon the idea that you are entitled to an inheritance.

Why Choose Morris Hall:
You have a number of options when it comes to estate planning, so why pick Morris Hall?  First off, estate planning and asset protection are a very complicated endeavor and you should only trust someone who focuses exclusively on those matters.  Also, MH is a proud member of The American Academy of Estate Planning Attorneys (AAEPA) which provides us additional support, advanced training, tools and information that is not available to others – which means that we can better protect your assets and your loved ones.  We are one of only two firms in Arizona that belong to the AAEPA and are the only firm in New Mexico that has been granted membership.  If you have assets and loved ones that you want to protect, you are in good hands with MH.  Contact us today at 888.222.1328 to schedule an appointment!

This blog should be used for informational purposes only.  It does not create an attorney-client relationship with any reader and should not be construed as legal advice.  If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.

When Does a Retirement Account stop Being a Retirement Account?

By | Estate Planning, Estate taxes, Other, Retirement Planning | No Comments

You have worked hard, and saved hard.  You have accumulated wealth in your IRA (I am using “IRA” to include all retirement plans, 401(k), 403(b)…).  And the government appreciates your efforts because it gives you protections against the claims of your creditors.  But when that IRA goes to your loved ones (called an “inherited IRA”) on your passing, those protections may longer be there.

The Supreme Court of the United States heard oral arguments on Monday (March 24, 2014) in the case of Clark v. Rameker (13-229, 03/24/2014).  And the key issue is whether a person’s inherited IRA is subject to their creditor claims in bankruptcy.  This decision can have long reaching effects on the millions of people who have billions of dollars in their retirement accounts.  And with the baby boomer generation reaching retirement age, these accounts will soon be passing to their beneficiaries in unprecedented numbers.

But the Court’s decision would not matter if there was proper estate planning done!  Proper estate planning mitigates the risks of ever changing laws and interpretations.  With the proper estate planning, a person’s IRA can be passed to the people she wants without worrying that the money they are giving will be subject to the creditors of their beneficiary.  The two main tools when planning with IRAs are the qualified trust and the IRA trust.

A qualified trust is a revocable trust that aligns with the Internal Revenue Code section 401(a), to enable the trust to be the beneficiary of an IRA, while enabling the required minimum distributions from the qualified trust to the trust beneficiary to be based on the oldest beneficiary’s life expectancy.  It is critical that this is done properly because a trust that is not qualified, and is named as a beneficiary of an IRA will force the beneficiary to deplete the IRA within five (5) years, and that is a major income tax burden!

When a qualified trust is coupled with a beneficiary trust, the decision in Clark will be moot.  A beneficiary trust, drafted in accordance to the specific state’s laws, will provide the mechanism necessary to be able to shield the inherited IRA from the reach of trust beneficiary’s creditors.

An IRA trust is a standalone trust (i.e. no other assets would be funded to it).  It combines the qualified trust and beneficiary trust, with the added benefit of being able to stretch the required minimum distribution based on each beneficiary’s own life expectancy.  So the younger beneficiaries will be able to grow more of the inherited IRA tax deferred, since the younger beneficiary will not be required to take as much of the inherited IRA’s balance out.

As the Supreme Court deliberates the Clark decision, remember that with proper IRA planning anyone could have avoided the issues that befell the Clark family.  Proper estate planning for IRAs is imperative to mitigate against the whims of Congress or the interpretations of the Supreme Court.  By using the tools of a qualified trust and/or an IRA trust will help ensure your retirement assets can be used and enjoyed by the people you have identified.

Albuquerque, New Mexico Estate Planning Attorney James PlitzContributed by MH Albuquerque, Santa Fe and Las Cruces Estate Planning Attorney, James P. Plitz.

What the Attorneys of Morris Hall Can Do For You:
The attorneys at Morris Hall have 100’s of years of combined experience ensuring that families’ assets are protected from probate, unnecessary taxes, creditors, ex-spouses and Medicaid spend-down.  The attorneys also help those in Arizona and New Mexico to apply for and receive Medicaid assistance and Veterans Benefits.  Our Arizona offices are located in Phoenix, Mesa, Scottsdale, Cave Creek, Tucson, Prescott, Flagstaff and Arrowhead.  Our New Mexico offices are located in Albuquerque, Las Cruces and Santa Fe.  Contact us today at 888.222.1328 to schedule an appointment!

This blog should be used for informational purposes only.  It does not create an attorney-client relationship with any reader and should not be construed as legal advice.  If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.

Estate Planning and your Retirements Accounts

By | Estate Planning, Retirement Planning | No Comments

I have been receiving a lot of great questions from my clients about their retirement accounts (IRA, 401(k), 403(b)…).  Their financial advisors are telling them to not name their MH trust as the beneficiary.  The financial companies are trying to help my clients with legal advice, and it tends to confuse things (but it does show that there are lot of attorneys who really don’t know what they are doing).

The basic premise of what they are telling my clients is: “You don’t have to worry about probate, because there is a beneficiary designation.”

This is true, at the base level.  But that is not the only concern.  And your MH trust covers a lot more than just probate avoidance.

Whether naming a person or your MH trust as beneficiary, there would not be any additional delays or restrictions when trying to collect or roll-over the account.  The one thing the financial company may be thinking is the potential income tax effect of naming a trust – there is a rule that requires the trust to withdraw the balance within 5 years (thus increasing the income tax in those years.  But with your MH trust that is not a concern, because your trust is Qualified (under the IRS regulations), so the “5 year” rule does not apply.

Further, by naming the trust as the beneficiary, there is no longer a risk of probate since the trust accounts for contingencies such as someone predeceasing you or if the beneficiary is a minor.

Married couples should name each other as Primary beneficiary. Your MH trust is named as contingent (or secondary).  Single folks should simply name your MH trust as the beneficiary.

By designating your trust as beneficiary, your beneficiaries enjoy the protections of your beneficiary trust and still can “stretch” the required minimum distribution over their life expectancy.

To make sure your retirement account works with your estate and maximizes the available protections, schedule an appointment to talk with one of our attorneys.

Albuquerque, New Mexico Estate Planning Attorney James PlitzContributed by MH Albuquerque and Santa Fe Estate Planning Attorney, James P. Plitz.

What the Attorneys of Morris Hall Can Do For You:
The attorneys at Morris Hall have 100’s of years of combined experience ensuring that families’ assets are protected from probate, unnecessary taxes, creditors, ex-spouses and Medicaid spend-down.  The attorneys also help those in Arizona and New Mexico to apply for and receive Medicaid assistance and Veterans Benefits.  Our Arizona offices are located in Phoenix, Mesa, Scottsdale, Cave Creek, Tucson, Prescott, Flagstaff and Arrowhead.  Our New Mexico offices are located in Albuquerque, Las Cruces and Santa Fe.  Contact us today at 888.222.1328 to schedule an appointment!

This blog should be used for informational purposes only.  It does not create an attorney-client relationship with any reader and should not be construed as legal advice.  If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.