Inheritance

Do you have an individual retirement account or other type of retirement account that you plan to leave to your loved ones? If so, proceed with caution. Inherited retirement accounts do not have asset protection when they pass to your loved ones, meaning creditors can seize the money in the accounts to satisfy any claims against your beneficiaries.

How Can Inherited Retirement Accounts Be Protected? 

Fortunately, retirement accounts can be protected, but only if you take action. Enter the standalone retirement trust (SRT). Many people use SRTs, a special type of trust that can protect retirement accounts.
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 Conversations about death and dying are rarely fun. Most people avoid them because they invoke feelings about our inevitable demise. Broaching this subject can be particularly difficult for parents and their adult children. Adult children may avoid bringing up the topic because they do not want to think about their parents’ mortality, and they may also want to avoid sounding as though they are waiting for their parents to die.

Despite these valid challenges to having conversations about death and dying, you should not avoid the topic.
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For decades, common financial planning wisdom has encouraged almost all American workers to maximize their contributions to qualified retirement accounts. Indeed, doing so can be a powerful way to reduce your current income tax liability, grow your savings exponentially tax-free, and, in most states, protect your savings from claims of creditors. And by and large, this is what most American workers have done.

The result is that Americans have gradually amassed huge amounts of wealth in these types of qualified plans. It is increasingly common for an IRA or 401k to be the highest value item of property that an American owns.
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Just like other important life tasks, your estate plan deserves your time and attention. It’s important that you work with us to review your estate plan at least once a year. Think of this as your estate plan’s annual physical exam, and remember—prevention is the best cure.

An annual exam isn’t necessarily the only time we see a doctor. Similarly, an annual planning meeting isn’t the only time you need to consider your estate plan. The occurrence of special life events may mean it is time to pick up the phone and call us.

If you experience any of these significant life events, get in touch with us, and we’ll make sure you are up to date.

Why would anyone want to refuse an inheritance? Although it is surprising to many, there are several circumstances when declining an inheritance can be beneficial. The law does permit you to refuse an inheritance if you comply with certain strict requirements. The legal term for a refusal of an inheritance is a “disclaimer,” which is defined as an irrevocable and unqualified refusal to accept an interest in property.

Studies have shown that 70% of family wealth is lost by the end of the second generation and 90% by the end of the third.  Don’t let your loved ones become part of these statistics. You need to understand, and work to overcome, the disconnect that occurs between generations regarding the transfer of wealth.  In this issue you will learn:

• The main factors that contribute to family wealth loss over the generations.
• How you can overcome your reluctance to discuss your wealth with your loved ones.

 Whether you have accumulated a little or a lot of wealth over your lifetime, it is likely that you have some particular thoughts on how you would like those assets to be used by loved ones after your death. Maybe you would like the assets to be used as a down payment on a home, be applied toward college tuition, or fund a dream vacation.  Unfortunately, without specific guidance from you, money that is left outright to your loved ones probably won’t be used the way you would like. For these reasons, and many more, leaving a delayed inheritance may be the best option.

Benefits of Delay

There are several reasons not to leave an outright distribution to your loved ones.
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Unfortunately, sometimes a death in the family can bring out the worst in people. Indeed, family resentments sometimes simmer during a time of grieving - particularly when money and assets from the deceased’s estate are involved. If you are a beneficiary under a loved one’s estate plan, you may be under the assumption that those assets will be distributed according to his or her wishes. Inheritance theft, however, is an underreported problem that can cost families dearly. Moreover, the theft can be perpetrated by someone who was highly trusted by the decedent - the executor, who is the person typically chosen by the decedent to manage the estate upon his or her death or incapacity.
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