Throughout history, many cultures have imposed restrictions on the right of an individual to freely bequeath assets. The historical basis of forced heirship was to require land to pass down to one’s issue—frequently giving priority in distributions to the eldest son. Today, most U.S. jurisdictions permit one to freely disinherit their descendents….
Trusts & Estates Articles
Over the last few years, there have been several articles written, as well as the issuance of Private Letter Rulings, regarding the potential benefits and tax consequences of the Beneficiary Defective Inheritor’s TrustTM. Briefly, the BDIT is an irrevocable trust, which is structured to be a “grantor trust” with respect to the beneficiary and not the grantor, yet allows the trust assets to be accessible to the beneficiary in this “best of both worlds” planning approach.
Financial professionals do it. Insurance professionals do it. Actuaries certainly do it. Yet we, as tax and estate planning professionals, all too often recommend techniques and strategies without doing it. And that “it” is risk assessment.
Howard Esterces, a member of Meltzer Lippe’s Estate and Trusts Group, discusses that those who have already begun receiving required minimum distributions from IRAs and qualified plans may be able to reduce their annual withdrawals—thereby increasing their tax deferral.
A SCIN typically arises through the sale of shares of stock or an interest in real estate to a family member
REA mandates payment of retirement benefits as a qualified joint and survivor annuity with a spouse (QJSA), and payment of a qualified pre-retirement survivor annuity death benefit to a surviving spouse (QPSA). These payments may be waived by a spouse who is not a member of the retirement plan under certain conditions.
The disclaimer can be a helpful tax and estate planning tool if used correctly. Often, the disclaimer is employed as a postmortem remedial device to fend off adverse tax repercussions and other unintended consequences of an estate plan gone awry. Other times, the anticipated use of the disclaimer is consciously incorporated into the estate plan by its drafter to preserve tax and distributive flexibility at the decedent’s death. Although, this article focuses on the application of the disclaimer in the estate tax context, significant non-tax objectives may also justify its use.