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Estate Planning - wish I knew more
Old 03-05-2007, 01:46 AM   #1
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Estate Planning - wish I knew more

I'm planning to meet with an estate lawer who claims that he has purchased the "rights" to a private letter from the IRS addressing putting an IRA into an trust that he calls IRA Extension Trust, which allows the RMD to pass from you to your child upon your death, and the RMD is then recalculated to the life expectancy of that child. He further claims that you can name the grandchild, rather then your child, and it then uses the life expectancy of the grandchild. This results, according to him, in greatly increased earnings, due to longer payout and lower payout amounts per year.
Does this all sound right. My alert hairs went up, when he said that he purchased the "rights" to this, and though this is exclusive to him, and you have to sign up him to make out the estate and trust documents to take advantage of this. The rest sort'a sounds right to me, but I'm not sure if there is a pony in there somewhere, or if it is legit.
I am especially cautious right now, with all of the proplems of the legal firm disbanding themselves due to a judgement against them for selling a "trust" mechanism which the IRS ruled against them, and they were subsequently sued by their clients and ultimately lost - or so the newspaper accounts claim.
Martha? others? thoughts, opinons, facts?
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Re: Estate Planning - wish I knew more
Old 03-05-2007, 02:59 AM   #2
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Re: Estate Planning - wish I knew more

having just inherited my mother's ira, as i understand it, because she was already taking rmd's i have two choices, i can take a lump sum payment and pay all taxes on that or i can take rmd's based upon my expected lifetime. if mom's grandchildren had been listed as beneficiary (or if it passes from me to them) they would take the rmd's based on their expected lifetime. as far as i know, our lawyers did not contact your lawyer to get permission for this, but that this is simply how it works.
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Re: Estate Planning - wish I knew more
Old 03-05-2007, 04:30 AM   #3
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Re: Estate Planning - wish I knew more

Purchasing "rights" to private letter ruling

I would avoid that attorney like the plague. Allowing named beneficiaries of IRA's to stretch out RMD's is allowed under IRA regs. You do not need rights to a private letter ruling. So that attorney is selling snake oil. Run, don't walk, in the opposite direction.

For info on the subject, read Ed Slott's "Parlay Your IRA Into A Family Fortune." (I know, the title sounds like hype, but he knows what he's talking about.)

JMHO
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Re: Estate Planning - wish I knew more
Old 03-05-2007, 10:32 AM   #4
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Re: Estate Planning - wish I knew more

Quote:
Originally Posted by whitestick
I'm planning to meet with an estate lawer who claims that he has purchased the "rights" to a private letter from the IRS addressing putting an IRA into an trust that he calls IRA Extension Trust, which allows the RMD to pass from you to your child upon your death, and the RMD is then recalculated to the life expectancy of that child. He further claims that you can name the grandchild, rather then your child, and it then uses the life expectancy of the grandchild. This results, according to him, in greatly increased earnings, due to longer payout and lower payout amounts per year.
Does this all sound right. My alert hairs went up, when he said that he purchased the "rights" to this, and though this is exclusive to him, and you have to sign up him to make out the estate and trust documents to take advantage of this. The rest sort'a sounds right to me, but I'm not sure if there is a pony in there somewhere, or if it is legit.
I am especially cautious right now, with all of the proplems of the legal firm disbanding themselves due to a judgement against them for selling a "trust" mechanism which the IRS ruled against them, and they were subsequently sued by their clients and ultimately lost - or so the newspaper accounts claim.
Martha? others? thoughts, opinons, facts?
Remember the robot from "Lost in Space"?? "DANGER, DANGER, Will Rogers........ALIEN ALERT, ALIEN ALERT"..........

Run, and make sure your wallet is in the FRONT POCKET............
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Re: Estate Planning - wish I knew more
Old 03-05-2007, 11:58 AM   #5
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Re: Estate Planning - wish I knew more

Uh, did anyone ever tell you that money is to be used for good purpose such as alleviating human pain and suffering? It is not meant to be tied up where no one can get their hands on it for generations.
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Re: Estate Planning - wish I knew more
Old 03-05-2007, 11:36 PM   #6
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Re: Estate Planning - wish I knew more

Quote:
Originally Posted by LOL!
Uh, did anyone ever tell you that money is to be used for good purpose such as alleviating human pain and suffering? It is not meant to be tied up where no one can get their hands on it for generations.
Which is why I'm wanting to spread it out to help throughout their life. It's the teach them to fish vrs. give them a fish principle. If they have more spread out, then it may give them a parachute, if all else fails. Or at least, that's what I hope it does. Also hoping that it will be the seed for them to continue saving and pass it on for future generations to do some good.
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Remember the robot from "Lost in Space"?? "DANGER, DANGER, Will Rogers........ALIEN ALERT, ALIEN ALERT"..........


Run, and make sure your wallet is in the FRONT POCKET............
That's what the itch in my back was saying as well, but I had no facts to support that
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Re: Estate Planning - wish I knew more
Old 03-06-2007, 12:47 PM   #7
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Re: Estate Planning - wish I knew more

Quote:
Originally Posted by whitestick
Which is why I'm wanting to spread it out to help throughout their life.
i think you would require a trust for that. i've no idea how you put an ira into a trust. inheriting the ira itself will only minimally regulate how the beneficiary withdraws funds. an rmd is simply that, minimum. it does not mean that the bene won't eat the whole fish in one seating.

if you set up a trust you'll want to explore the cost of maintaining the trust as it will eat into funds that would otherwise be available to heirs.
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Re: Estate Planning - wish I knew more
Old 03-06-2007, 12:54 PM   #8
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Re: Estate Planning - wish I knew more

Quote:
Originally Posted by lazygood4nothinbum
i think you would require a trust for that. i've no idea how you put an ira into a trust. inheriting the ira itself will only minimally regulate how the beneficiary withdraws funds. an rmd is simply that, minimum. it does not mean that the bene won't eat the whole fish in one seating.

if you set up a trust you'll want to explore the cost of maintaining the trust as it will eat into funds that would otherwise be available to heirs.
Our attorney once said that you can't control the actions of others after you die, to attempt to do so is very expensive. The best you can do is to provide for your own life and educate your heirs about how to best use the resources you might have left.
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Re: Estate Planning - wish I knew more
Old 03-06-2007, 01:13 PM   #9
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Re: Estate Planning - wish I knew more

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Our attorney once said that you can't control the actions of others after you die, to attempt to do so is very expensive. The best you can do is to provide for your own life and educate your heirs about how to best use the resources you might have left.
Very true. And, I don't think a trust really does much to protect an heir from 'blowing it all'. Can't they 'sell' the future annual revenue stream to some clever financier that will give them a fraction of it's future value today? Kind of like the lottery - 20 year pay out, or a lump sum?

Your heirs either have values (learned from you or someone else, or developed on their own), or they do not. A trust is not going to change that, IMO.

-ERD50
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Re: Estate Planning - wish I knew more
Old 03-06-2007, 02:25 PM   #10
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Re: Estate Planning - wish I knew more

Quote:
Originally Posted by ERD50
Very true. And, I don't think a trust really does much to protect an heir from 'blowing it all'. Can't they 'sell' the future annual revenue stream to some clever financier that will give them a fraction of it's future value today? Kind of like the lottery - 20 year pay out, or a lump sum?

Your heirs either have values (learned from you or someone else, or developed on their own), or they do not. A trust is not going to change that, IMO.

-ERD50
Well, if the trust is large enough to have a fiduciary managing it that continues after death, they probably can control it.

But, Revocable Living Trusts? Not likely..........the only thing you can do is write in things like 10% at age 25, another 25% at age 35, etc.............
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Re: Estate Planning - wish I knew more
Old 03-06-2007, 11:37 PM   #11
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Re: Estate Planning - wish I knew more

Hmm! Things I hadn't thought about. Any others. This is good education for me.
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Re: Estate Planning - wish I knew more
Old 03-07-2007, 04:37 AM   #12
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Re: Estate Planning - wish I knew more

Quote:
Originally Posted by whitestick
I'm planning to meet with an estate lawer who claims that he has purchased the "rights" to a private letter from the IRS
I'll second the fraud alert. It's my understanding the the "private" rulings are publically available. If they aren't anything really good would be known all over the place. Their are no reserved "rights" to tax code rulings.

Now if you're politically connected you can get a special bill passed and signed that creates a very short term opportunity for something really great for your family. The most famous is the Joe Kennedy trust arrangement that allowed him and his children to avoid all sorts of taxes his children and grandchildren think the rest of us should pay.
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Old 03-07-2007, 12:16 PM   #13
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Re: Estate Planning - wish I knew more

I don't mean to distract from the topic but my company wants to get a private letter ruling from the IRS on a certain topic... does anyone know how much it costs and/or how long it takes to get a response back? Would an opinion from an attorney be an intermediate step?
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Old 03-07-2007, 12:20 PM   #14
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Re: Estate Planning - wish I knew more

Quote:
Originally Posted by ERD50
And, I don't think a trust really does much to protect an heir from 'blowing it all'. Can't they 'sell' the future annual revenue stream to some clever financier that will give them a fraction of it's future value today? Kind of like the lottery - 20 year pay out, or a lump sum?
Yes, they could...but then the financier that bought the rights to the income stream is now completely dependent upon the actions of the trustee, and must have faith that the trustee won't do crazy things with it and watch it slide away in commissions, bad investments, trustee fees, etc.
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Re: Estate Planning - wish I knew more
Old 03-07-2007, 01:20 PM   #15
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Re: Estate Planning - wish I knew more

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Yes, they could...but then the financier that bought the rights to the income stream is now completely dependent upon the actions of the trustee, and must have faith that the trustee won't do crazy things with it and watch it slide away in commissions, bad investments, trustee fees, etc.
I don't know of any viable entity that has figured out a way to "buy" trust assets on a NPV basis........not sure how that would work..........

Trusts are a tricky thing to the folks who become trustee through death or disability......they take on a lot more fiduciary responsibility than they realize...........
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Re: Estate Planning - wish I knew more
Old 03-07-2007, 02:02 PM   #16
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Re: Estate Planning - wish I knew more

Can you recommend any good books on estate planning?

If I understand correctly, it only matters for values over something in the $600k range (I don't have the exact #)... and since I plan to retire on about $3M, this would be a relevant issue.

I could always buy a lump-sum Whole Life policy....


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Quote:
Originally Posted by FinanceDude
I don't know of any viable entity that has figured out a way to "buy" trust assets on a NPV basis........not sure how that would work..........

Trusts are a tricky thing to the folks who become trustee through death or disability......they take on a lot more fiduciary responsibility than they realize...........
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