Passing Down Your IRA or 401(k) Tax-Free with an Inherited IRA

WEBVTT
00:00:08.320 --> 00:00:10.560
Welcome everyone to today's webinar.
00:00:10.720 --> 00:00:14.240
This is a joint production of Directed IRA and KKOS Lawyers.
00:00:14.480 --> 00:00:17.600
I have next to me Ryan Tosto from KKOS Lawyers.
00:00:17.839 --> 00:00:18.480
He's an attorney.
00:00:18.559 --> 00:00:20.239
I'm going to introduce him here in a moment.
00:00:20.399 --> 00:00:29.280
But what we're talking about today is passing down your IRA or 401k tax-free and to who you want to get it, more importantly.
00:00:29.440 --> 00:00:31.039
And we're going to go over all these rules.
00:00:31.120 --> 00:00:35.119
You've probably heard about inherited IRAs or beneficiary IRAs.
00:00:35.280 --> 00:00:39.439
Maybe you've heard about the 10-year rule or spousal rollover rules.
00:00:39.759 --> 00:00:44.640
We want to go over all of that today so you understand how your retirement account's going to pass down.
00:00:44.799 --> 00:00:51.280
Or maybe you're someone who has a parent that's been deceased, you have an inherited IRA, or you're planning to inherit one soon.
00:00:51.520 --> 00:00:53.759
We want to make sure you understand those rules.
00:00:53.920 --> 00:00:57.520
So a couple things as we get out of the gates here.
00:00:57.920 --> 00:00:59.679
We do have a slide deck.
00:01:00.159 --> 00:01:01.600
So you can get the slide deck.
00:01:01.759 --> 00:01:03.280
It's got quite a bit of information in it.
00:01:03.359 --> 00:01:07.920
We'll be referring to it off and on as we go through the presentation today.
00:01:08.159 --> 00:01:08.400
All right.
00:01:08.480 --> 00:01:09.439
Well, let's talk about Ryan.
00:01:09.519 --> 00:01:10.480
I'm Matt Sornson.
00:01:10.719 --> 00:01:11.359
I'm here all the time.
00:01:11.439 --> 00:01:14.959
You probably know me and are sick of hearing from me, but let's talk about Ryan here for a second.
00:01:15.040 --> 00:01:18.000
He's been an attorney at KKO's lawyers for a couple years now, two or three years.
00:01:18.560 --> 00:01:18.959
Almost three.
00:01:19.280 --> 00:01:20.000
Three next month.
00:01:20.239 --> 00:01:20.560
Okay.
00:01:20.640 --> 00:01:20.959
Yeah.
00:01:21.120 --> 00:01:21.599
All right.
00:01:21.760 --> 00:01:24.879
And uh he's married, new dad.
00:01:25.200 --> 00:01:25.439
Yeah.
00:01:25.599 --> 00:01:27.840
Three month-old as of tomorrow.
00:01:28.079 --> 00:01:28.319
All right.
00:01:28.400 --> 00:01:29.359
And you do actually sleep.
00:01:29.840 --> 00:01:31.359
You're your baby sleeps.
00:01:31.439 --> 00:01:31.519
Okay.
00:01:31.840 --> 00:01:32.079
A little bit.
00:01:32.480 --> 00:01:32.799
Getting there?
00:01:32.879 --> 00:01:32.959
Okay.
00:01:33.280 --> 00:01:34.400
We're going through a regression.
00:01:34.640 --> 00:01:35.200
Oh, dang.
00:01:35.280 --> 00:01:35.519
Okay.
00:01:35.599 --> 00:01:36.560
I shouldn't have brought that up.
00:01:36.719 --> 00:01:37.040
Yeah.
00:01:37.280 --> 00:01:37.680
All right.
00:01:37.760 --> 00:01:41.200
So, but Ryan's done hundreds of estate plans with clients.
00:01:41.359 --> 00:01:42.560
This is a common topic.
00:01:42.719 --> 00:01:45.200
How am I leaving this and passing it on?
00:01:45.439 --> 00:01:50.079
Um, so I want him here to kind of get to that lawyer side of things.
00:01:50.319 --> 00:01:58.560
And I want to talk about some of the mechanics from the IRA custodian side too, and just make sure everybody has like the best overall picture about how this works.
00:01:58.640 --> 00:02:02.319
Um, and we'll have Ryan's contact info later if anybody wants to work directly with him.
00:02:02.480 --> 00:02:05.760
All right, so let me give you the roadmap and then we're gonna dive into it.
00:02:05.840 --> 00:02:10.639
So here's the six items we're gonna be covering today: inherited IRA versus spousal rollover.
00:02:10.719 --> 00:02:12.560
What are your inherited IRA options?
00:02:12.719 --> 00:02:16.400
There's actually a few options that you have, so you could choose.
00:02:16.639 --> 00:02:18.319
Um, what's the best option?
00:02:18.400 --> 00:02:19.520
I'm gonna tell you what that is.
00:02:19.680 --> 00:02:21.199
I have an opinion at least.
00:02:21.360 --> 00:02:23.759
Um, we'll see if Ryan's differs from mine.
00:02:23.919 --> 00:02:26.879
Um, then we'll talk about some of the legal requirements about how this passes.
00:02:27.039 --> 00:02:32.319
There's a lot of confusion and mistakes people make on this, unfortunately, and like what documents control here.
00:02:32.400 --> 00:02:33.439
So we'll cover that.
00:02:33.599 --> 00:02:35.120
And then what about minor kids?
00:02:35.199 --> 00:02:37.599
How should I be thinking about for them and planning there?
00:02:37.759 --> 00:02:42.159
And then what about some of the tax traps I can fall into if I'm jacking this up or not doing it right?
00:02:42.240 --> 00:02:45.280
So we want to make sure you understand those and avoid them.
00:02:45.599 --> 00:02:45.919
All right.
00:02:46.000 --> 00:02:47.520
So let's just get this started here.
00:02:47.599 --> 00:02:51.680
And Ryan, why don't we maybe just start off with like a spousal rollover?
00:02:52.240 --> 00:02:58.719
And maybe if you want to speak to that here for a second, um, let's say that I'm married, obviously.
00:02:58.960 --> 00:03:07.439
What would your would you recommend that I do that I list my spouse's beneficiary so that we can do a spousal rollover and maybe explain that role first.
00:03:07.599 --> 00:03:07.840
Right.
00:03:08.000 --> 00:03:14.479
Yeah, in most cases, the spouse is typically your primary beneficiary on your IRA.
00:03:14.639 --> 00:03:26.240
We're gonna get into today the mechanics of how do you pass your IRA to who you want it to be, whether that's through a trust, whether that's to your spouse, to your kids directly.
00:03:26.400 --> 00:03:38.800
There's pros and cons to really all the above, but the simplest, most common, I would assume at least 95 plus percent of people, their spouse is named as the primary beneficiary.
00:03:38.879 --> 00:03:47.439
Now, if your spouse inherits, it essentially is the most simple way, in most cases as well, where they just take your place.
00:03:47.680 --> 00:03:56.719
Their IRA, their Roth, their traditional, however, it was listed previously, you essentially become them, you take their place.
00:03:56.879 --> 00:04:05.520
We're gonna get into there's some other options, but ultimately for the most average common scenario, that's kind of what we're dealing with.
00:04:05.840 --> 00:04:06.080
Yeah.
00:04:06.159 --> 00:04:12.240
So let's say your spouse passes first, you're married, and so you're the surviving spouse.
00:04:12.400 --> 00:04:17.040
Well, if they list you as beneficiary, that IRA just goes into your name.
00:04:17.199 --> 00:04:19.199
It's called a spousal rollover.
00:04:19.360 --> 00:04:22.480
So we're gonna get into inherited IRAs here, which are different.
00:04:22.560 --> 00:04:24.800
So we just want to make sure we're understanding this distinction.
00:04:24.879 --> 00:04:25.920
This is the one distinction.
00:04:26.000 --> 00:04:28.000
Everything else is an inherited IRA, okay?
00:04:28.160 --> 00:04:31.680
Your kids get it, your friend, your whatever, okay.
00:04:31.920 --> 00:04:35.360
But the first one is that's unique is the spousal rollover.
00:04:35.439 --> 00:04:47.759
The reason that's unique is let's say you pass away and let's say you're 65, and let's say your surviving spouse is 55, and they inherit your IRA.
00:04:48.240 --> 00:04:54.480
Well, it as a spousal rollover, if they do that, well, it's now their IRA and they're 55.
00:04:54.560 --> 00:04:55.680
They can't pull money out of it.
00:04:56.000 --> 00:04:58.319
They still got to wait till they're 59 and a half.
00:04:58.480 --> 00:05:01.759
So it's just treated under the rules as if it's their IRA.
00:05:01.839 --> 00:05:04.319
Now, in most instances, that's actually good.
00:05:04.639 --> 00:05:11.040
Um, but just understand that if they do a spousal rollover, they have an option of just taking a lump sum.
00:05:11.199 --> 00:05:20.879
But if they do a spousal rollover, um, it becomes an IRA in their name, and the the 59 and a half penalty could be so that's I think the only downside really to it, right?
00:05:21.199 --> 00:05:37.839
Is if and you'll know this because you'll have the option, if you're listed as the beneficiary, your spouse predeceases you, you're the surviving spouse, you're not 59 and a half yet, and you and you need this money to live off of, let's say, and you're 55.
00:05:38.240 --> 00:05:41.120
Well, you can there's other ways you can take a lump sum.
00:05:41.199 --> 00:05:44.959
I don't love that, but otherwise you're gonna have this 10% penalty.
00:05:45.279 --> 00:05:50.160
So there's so I think that's the only negative, is just that 59 and a half.
00:05:50.240 --> 00:05:51.519
You need the money before then.
00:05:51.759 --> 00:05:52.319
Right.
00:05:53.279 --> 00:05:56.639
Um okay, well, let's get to for everyone else.
00:05:56.800 --> 00:06:04.079
Okay, and this is really what most of what we're gonna talk about today is everyone else, spousal rollover um uh is is quite simple.
00:06:04.480 --> 00:06:06.240
Well, let me make one other distinction.
00:06:07.120 --> 00:06:12.560
On a spousal rollover, the other thing is is you could still do a Roth conversion after you do a spousal rollover.
00:06:12.639 --> 00:06:20.160
So let's say your spouse passes away with a traditional IRA, you would receive it as a traditional IRA, you could convert it to Roth if you wanted.
00:06:20.480 --> 00:06:30.160
Once we get to inherited IRAs here in a second, one important distinction is whatever account type you inherit it as, traditional or Roth, it's gonna stay traditional Roth.
00:06:30.319 --> 00:06:34.160
You can't do a Roth conversion once an account is an inherited IRA.
00:06:34.480 --> 00:06:40.319
Okay, so every other beneficiary besides a spouse is gonna receive what's called an inherited IRA.
00:06:41.199 --> 00:06:46.399
And in an inherited IRA, the account stays in the deceased person's name.
00:06:46.639 --> 00:06:55.519
So it'll be like, you know, directed trust company, FBO, let's see, I died, Matt Sornson, date of death, this date, and then the beneficiary.
00:06:55.680 --> 00:07:01.199
So it's still like attached to that person who passed away.
00:07:02.160 --> 00:07:04.560
You're the heir, though, inheriting it.
00:07:04.879 --> 00:07:05.279
All right.
00:07:05.439 --> 00:07:08.879
Now there's some options on how that money comes out over time.
00:07:09.120 --> 00:07:10.639
We'll talk about this.
00:07:10.959 --> 00:07:15.759
Um but uh but but here's what what can happen, okay?
00:07:16.079 --> 00:07:23.680
From an inherited IRA, I think the first thing that's important to understand is you can take the money out and there's no 10% early withdrawal penalty.
00:07:24.160 --> 00:07:24.399
Right.
00:07:24.639 --> 00:07:37.120
So even if you know I'm 40 years old, let's say your parent passes away, they leave you an IRA account, and you're like, all right, well, I'm 40, I want to start pulling some money out.
00:07:37.279 --> 00:07:39.439
Now there's no 10% penalty.
00:07:39.519 --> 00:07:39.759
All right.
00:07:39.839 --> 00:07:40.959
So that's a unique option.
00:07:41.040 --> 00:07:42.879
There's no early withdrawal penalty.
00:07:43.040 --> 00:07:47.839
Um so that's a nice perk, of course, of an inherited IRA.
00:07:48.000 --> 00:07:49.759
Now let's go over how to get the money out.
00:07:49.839 --> 00:07:57.519
Why don't you go through some of the options here on the different ways you can choose, and you have to make a selection on how to get the money out of the inherited IRA.
00:07:57.920 --> 00:08:16.399
When the individual that had the IRA passes, you're going to whatever custodian, you're providing the death certificate, you're then opening your own inherited IRA, whether that could be your spouse, it would be rare, whether that's your parents, grandparents, who knows who gave you that IRA.
00:08:16.560 --> 00:08:22.879
Once you get to that point, the options essentially are are they in RMD mode or not?
00:08:23.040 --> 00:08:29.759
And essentially we'll get into what qualifies as RMD mode or not in the simplest way.
00:08:29.920 --> 00:08:35.200
Are they 73 years or older or are they less when they passed?
00:08:35.360 --> 00:08:38.000
Were they taking RMDs from that account?
00:08:38.159 --> 00:08:41.279
So that's kind of one nuance to it, which we'll build on.
00:08:41.440 --> 00:08:50.080
But once you get the inherited IRA, it's essentially your IRA to decide what you want to do with it within some of the parameters.
00:08:50.240 --> 00:08:53.120
And one of those is you could just simply take a lump sum.
00:08:53.519 --> 00:09:04.480
It's if it is a traditional IRA, just like any traditional IRA, when you pull out of that or distribute from the IRA, it's income in the year you take it out.
00:09:04.559 --> 00:09:16.000
So if you had a$300,000 IRA, we're talking an additional$300,000 of income on top of whatever other income you have or ordinary income you have.
00:09:16.159 --> 00:09:24.559
So that could be putting you in one of the higher tax brackets, if not the highest tax bracket, just by not being strategic with what you're doing.
00:09:24.720 --> 00:09:27.840
So that's kind of in most cases the worst case scenario.
00:09:27.919 --> 00:09:30.960
There's the 10-year rule, which is typically the standard.
00:09:31.200 --> 00:09:36.799
So typically you have 10 years to essentially liquidate the entire account.
00:09:37.120 --> 00:09:42.799
By the time that 10-year passes on December 31st, you need to take everything out of it.
00:09:42.960 --> 00:09:44.000
As simple as that.
00:09:44.159 --> 00:09:51.519
Now, throughout that process, you can get strategic with am I taking out annually a little chunk here and there?
00:09:51.679 --> 00:09:59.039
Am I required to be taking out annually here and there via those RMDs that you're required to maintain?
00:09:59.200 --> 00:10:03.679
So there's just some strategy in how do I manage my income?
00:10:03.840 --> 00:10:08.559
If I'm gonna expect to be in a low income year in year eight, do I take a big chunk then?
00:10:08.639 --> 00:10:11.200
There's just options in what you can do.
00:10:11.360 --> 00:10:16.639
Yeah, there's other rules involved depending on some of the pre-2020 rules as well.
00:10:16.799 --> 00:10:18.879
But in a nutshell, that's kind of how it is.
00:10:19.120 --> 00:10:26.000
Yeah, and I think the lump sum is generally the worst way to do it, um, whether it's a traditional or a Roth, right?
00:10:26.080 --> 00:10:36.320
So let's say you inherited a traditional, like Ryan said, if you take that full lump sum, let's go with the$300,000 IRA you inherit, well, that's$300,000 going into taxable income in one year.
00:10:36.480 --> 00:10:43.840
When you could have chunked this, and we know we use that for like Roth conversion strategies, but you could have chunked this inherited IRA over time.
00:10:44.080 --> 00:10:50.320
If it's a Roth account, you could take the full$300,000 out and there's no tax on that, right?
00:10:50.399 --> 00:10:51.519
Because you inherited a Roth.
00:10:51.759 --> 00:11:00.639
Roth, there's no tax when you take the distribution, even in an inherited Roth, but I'm missing the opportunity of growing and compounding that for more tax-free dollars in the future.
00:11:00.799 --> 00:11:06.799
So I don't like the tax outcome on either on the lump sum, unless you're like desperately in need of the money.
00:11:06.960 --> 00:11:10.879
Like maybe you've got creditors chasing you down in your life or whatever.
00:11:10.960 --> 00:11:11.360
I don't know.
00:11:11.440 --> 00:11:14.480
You got there's some something important where you really have to take a lump sum.
00:11:14.879 --> 00:11:20.559
Uh I like how you said that kind of the default or the most common is gonna be the 10-year rule.
00:11:20.879 --> 00:11:23.919
So let's kind of think about this for traditional versus Roth.
00:11:24.080 --> 00:11:28.879
Because I was interesting how you kind of start, let's I like that$300,000 account as a good example.
00:11:29.120 --> 00:11:33.279
Let's say you inherit a$300,000 traditional IRA.
00:11:33.440 --> 00:11:38.240
So this is an inherited traditional IRA, and you've got$300,000 to pull it out.
00:11:38.480 --> 00:11:42.879
Now we're gonna get to this RMD issue, by the way, here in a second.
00:11:42.960 --> 00:11:54.000
This RMD issue has to deal with whether you can take uh whether you have to take one tenth of the money over 10 years, or you can just wait until the 10th year and pull the whole thing out at year 10.
00:11:54.159 --> 00:11:56.879
So we'll get to that here in a second, but just hang with me for a second.
00:11:57.120 --> 00:12:00.720
Let's say it's traditional IRA, you inherit it, you're doing the 10-year rule.
00:12:00.879 --> 00:12:02.799
Well, you may want to chunk some of this over time.
00:12:02.960 --> 00:12:20.559
Let's say you're 45 and you're still working for the next 15, 20 years, you know, you're in a good income, you're f you know, you're finally at like the the upper end of your career, you're making more money, your business is finally taking off, you know, you're not in your 20s making 20-year-old money or 30-year-old money, you're like, you're you're making more money, okay?
00:12:21.279 --> 00:12:30.480
So now I can start chunking little pieces away each year over that 10-year window with a traditional account.
00:12:31.840 --> 00:12:35.600
Um, and maybe that's one tenth, however, however you want to do it.
00:12:35.919 --> 00:12:43.600
But let's let's flip that though and say you're 60 and it's a traditional IRA and you're still working for another five years.
00:12:43.919 --> 00:12:47.600
Well, you may want to not take anything for that first five years, right?
00:12:47.759 --> 00:12:48.639
Absolutely I don't know.
00:12:48.960 --> 00:12:51.919
Like you, and you may then just take the rest later on.
00:12:52.480 --> 00:13:01.120
So you everybody's in a little bit different situation, and I think the the unique thing on the traditional is thinking about that, what you brought up earlier, just like the tax.
00:13:01.200 --> 00:13:02.480
How am I gonna be taxed on that?
00:13:02.720 --> 00:13:02.879
Right.
00:13:03.039 --> 00:13:04.799
And that's where the strategy comes in.
00:13:04.879 --> 00:13:19.440
And what I find interesting, just how can you maximize every dollar of this, minimize as much in taxes as possible, and put your money in the most efficient buckets like these IRAs for as long as possible.
00:13:19.919 --> 00:13:22.720
And then now let's flip it to the Roth, though.
00:13:22.799 --> 00:13:33.759
If you think about the Roth here, um unless you I kind of my strategy on the Roth is don't touch it, let it go for another 10 years.
00:13:34.000 --> 00:13:56.799
Um, and I've yeah, you know, I even like thinking about how, like, you know, that if if I inherit a and I've talked to many clients that in get an inherited Roth IRA and they got another 10-year window, I'm like, if you get a 7% return over the next 10 years and you inherited this$300,000 account, well, you can double that to a$600,000 account in 10 years at a 7% return.
00:13:57.200 --> 00:14:00.159
So don't touch it, don't pull any money out.
00:14:00.320 --> 00:14:09.200
You've got a tax-free bucket that's gonna compound and grow in the most tax advantageous way than any other investment account you could be using.
00:14:09.440 --> 00:14:13.679
So let's not touch the Roth if you don't have to.
00:14:13.919 --> 00:14:16.000
Let's let that thing compound.
00:14:16.320 --> 00:14:19.360
So um, so I think it's a little different on the on the Roth.
00:14:19.519 --> 00:14:22.559
Any anything you disagree on that or anything anything else on the Roth you just?
00:14:22.799 --> 00:14:30.720
No, no, I mean it's exactly the best thing you can possibly have is essentially a Roth after tax dollars.
00:14:30.960 --> 00:14:36.799
Let it grow as many years as possible, as long as you don't need access to those dollars at any point.
00:14:37.039 --> 00:14:41.120
You it's in your favor tax-wise to keep it in the account as long as possible.
00:14:41.279 --> 00:14:44.399
So you might as well max out those 10-ish years.
00:14:44.799 --> 00:14:46.480
All right, let's get to this 10-year rule.
00:14:46.559 --> 00:14:51.840
Okay, so this is you know, leave it to Congress to make something super complicated.
00:14:52.000 --> 00:14:58.799
And it frankly, it justifies our existence as tax lawyers some of this time that it's so damn confusing.
00:14:59.120 --> 00:14:59.759
All right.
00:15:00.320 --> 00:15:05.840
In inherited IRAs, and this is going to be for traditionals because they have what's called RMD.
00:15:06.000 --> 00:15:08.320
So RMD is required minimum distributions.
00:15:08.399 --> 00:15:23.679
If you have a traditional IRA or traditional 401k, once you hit age 73, this age adjusts, you know, it'll be 75 soon, but like once you hit age 73, if you have a traditional IRA or traditional 401k, you have to start taking what are called required minimum distributions.
00:15:23.840 --> 00:15:26.720
You have to start pulling some money out of that account every year.
00:15:27.519 --> 00:15:31.759
And that's just on anybody's traditional IRA or traditional 401k.
00:15:32.559 --> 00:15:50.799
Well, this 10-year rule, when they they pass this, what Congress did is they said if someone dies with a traditional IRA or traditional 401k, and they're in RMD age, 73 or older, they have 10 years to drain it.
00:15:50.879 --> 00:15:52.159
Whoever does an inherited account.
00:15:52.240 --> 00:15:55.600
So let's say you do an inherited traditional IRA, your parents pass away.
00:15:55.759 --> 00:15:57.679
Let's say they were 75 years old.
00:15:57.919 --> 00:16:04.799
When they passed away, they're in they're in RMD age, and let's say that you're 50, you inherit this account.
00:16:05.919 --> 00:16:08.799
All right, well, it's a traditional account, they're on RMD.
00:16:08.960 --> 00:16:14.559
You have to take one-tenth of that account over time out over that 10-year window.
00:16:14.639 --> 00:16:28.720
You can still keep investing it for 10 and growing it, but you've got to take a required minimum distribution because when they died, they were already in RMD was the rationale and kind of the crappy way they wrote the law and tried to make sense of it.
00:16:28.879 --> 00:16:38.320
I will just say the retirement industry and Congress, or sorry, the retirement industry, after Congress passed this law, did not think that was how the law was going to get interpreted.
00:16:38.480 --> 00:16:40.799
The IRS came out with this interpretation.
00:16:40.960 --> 00:16:43.039
Um, it's gone back and forth for a number of years.
00:16:43.120 --> 00:16:48.559
There was relief in 2022 for this to say if you did it wrong, we don't care, don't worry about it.
00:16:48.639 --> 00:16:50.000
We know it was confusing.
00:16:50.159 --> 00:16:52.960
Um, but this is the rule now.
00:16:53.120 --> 00:16:55.279
So I just want to make sure everybody understands that.
00:16:55.519 --> 00:16:56.320
Maybe you can explain it.
00:16:56.399 --> 00:16:57.679
Did I get that clear?
00:16:58.080 --> 00:16:59.600
It it is confusing.
00:16:59.759 --> 00:17:10.000
Yeah, I mean, in the simplest way, if you how I've always thought about it, and maybe this is not the exact way to think of it, is the IRS in theory.
00:17:10.079 --> 00:17:13.119
The whole purpose of RMDs is they eventually want their cut.
00:17:13.200 --> 00:17:16.000
You've never paid taxes on those dollars before.
00:17:16.240 --> 00:17:28.079
So once age 73 hit, they start to get their cut, and maybe they get used to getting their cut of your IRA, and now that that person's passed, they eventually just want to continue to get that and liquidate the account.
00:17:28.160 --> 00:17:29.359
So maybe that's the simplest way to put it.
00:17:29.519 --> 00:17:30.160
That's a good way to put it.
00:17:30.480 --> 00:17:32.480
They got their hand in the jar, so to speak.
00:17:32.559 --> 00:17:38.720
They're like, we're here, we've started taking money from this account, they died, we're still taking money from this account.
00:17:39.279 --> 00:17:41.519
But let's change the facts, okay?
00:17:41.680 --> 00:17:50.240
Let's say um, let's go back to that same example, but you had a parent that passes away at age 70 with their traditional IRA.
00:17:50.480 --> 00:17:57.359
You're 45, you inherit that um account, they were not in RMD age.
00:17:58.000 --> 00:17:58.640
You're good.
00:17:59.039 --> 00:18:04.720
Okay, because the IRS wasn't taking their cut yet, they didn't get addicted to the uh the money coming out of that IRA.
00:18:04.880 --> 00:18:15.680
So you would have now that 10-year window open to where you could receive that as a traditional inherited IRA and continue and invest the account without having to take RMD.
00:18:15.759 --> 00:18:19.759
So, but at your 10, you would have to take full distribution.
00:18:20.079 --> 00:18:27.440
So that's where you probably would need to still be strategic, though, about you may not you may not want to wait until you're 10 on a traditional IRA.
00:18:27.680 --> 00:18:27.920
Right.
00:18:28.000 --> 00:18:36.880
They may not be required distributions, but it's probably uh wise distributions, or there's some buzzword we can kind of put on the spot.
00:18:37.039 --> 00:18:38.000
But yeah, yeah.
00:18:38.240 --> 00:18:52.079
Otherwise, I mean your$300,000 account could balloon into$450 or whatever it may be, and now you're on the hook for all of that in taxes as income, and we'll get into what that looks like.
00:18:52.720 --> 00:18:55.200
All right, so that's the 10-year rule.
00:18:55.359 --> 00:18:59.920
Um, now this does not apply to Roths, okay, because Roths don't have RMD.
00:19:00.079 --> 00:19:03.039
All right, so don't worry about this for the Roth IRAs.
00:19:03.200 --> 00:19:07.759
This is specific for traditional IRAs where they begin taking RMD.
00:19:08.000 --> 00:19:36.079
Now, if you have an inherited IRA already that you inherited from someone before 2020, someone was deceased before 2020 and you received an inherited IRA, you have an old set of rules where you have to take RMD based on your age when you and and it's it's which is usually you're younger, so you don't have 10 years, let's say you're 40 and you inherit the account, you kind of have like a 40-year window of where you're taking that money out over time.
00:19:36.240 --> 00:19:42.319
So the the amount you have to take is very low compared to a 10-year window, it you have to be taking more, obviously.
00:19:42.559 --> 00:19:50.079
So those were called stretch IRAs back in the day, or they still can call them stretch IRAs, it's just like a 10-year limitation now.
00:19:50.240 --> 00:19:52.319
So just know there's a little old set of rules.
00:19:52.400 --> 00:19:59.279
If you do have an inherited IRA, and we have many at directed IRA, people before 2020 that passed away and inherited it.
00:19:59.519 --> 00:20:02.240
The RMD is not a 10-year window.
00:20:02.400 --> 00:20:07.200
It's the life of the person that inherited the account, their life expectancy.
00:20:07.440 --> 00:20:09.920
You have to take a small amount every year.
00:20:10.160 --> 00:20:22.559
Um, but the nice thing, I think, is we were talking about this, no matter what we're talking about, Roth account, traditional account, in this 10-year window here, if you want to take the money, you can take it whenever you want.
00:20:22.720 --> 00:20:24.319
No penalty, no tax.
00:20:24.480 --> 00:20:34.640
A lot of people talk about the inherited Roth IRA is like a tax-free ATM because not only does it grow and come out tax-free, you can pull it out whenever you want.
00:20:34.799 --> 00:20:37.599
Even if I have an inherited IRA and I'm 45.
00:20:37.920 --> 00:20:38.160
Right?
00:20:38.240 --> 00:20:42.559
If I have an inherited IRA and I'm 45, it doesn't, I don't have to wait till I'm 59 and a half.
00:20:42.799 --> 00:20:45.440
I want to pull a bunch of money out next year, knock yourself out.
00:20:45.519 --> 00:20:47.200
No, it's no tax on it.
00:20:47.359 --> 00:20:56.799
Um, and so you you really have a lot more access to that account than you would with your own Roth IRA, because I would have to wait till I'm 59 and a half with my own Roth IRA.
00:20:56.960 --> 00:21:01.119
Okay, do we have any questions yet, Jordan, on 10-year rule or lump sum?
00:21:01.440 --> 00:21:02.960
Any of those options yet?
00:21:03.200 --> 00:21:04.319
Let us know if you have questions.
00:21:04.480 --> 00:21:05.759
Jordan's here in the chat.
00:21:05.839 --> 00:21:08.079
The team might be answering some questions in the chat too.
00:21:08.160 --> 00:21:14.319
But okay, we have one uh specifically from uh about the 10-year rule uh related to from Sue Mayfield.
00:21:14.559 --> 00:21:17.839
Do you recommend putting the living trust as the IRA beneficiary?
00:21:18.000 --> 00:21:24.640
And does the trust have to file tax returns every year if the beneficiary is not supposed to get the inheritance until 10 years later?
00:21:24.960 --> 00:21:26.079
Why don't you fill that one?
00:21:26.240 --> 00:21:29.039
Listing the IRA, the first there's a two-part question there.
00:21:29.119 --> 00:21:33.359
So the first question was listing the trust as beneficiary on the IRA.
00:21:33.599 --> 00:21:33.759
Yes.
00:21:33.920 --> 00:21:37.200
Do you recommend putting the living trust as the IRA beneficiary?
00:21:38.079 --> 00:21:39.039
It it depends.
00:21:39.119 --> 00:21:55.119
So the lawyerly answer is usually depends, but in most cases, it kind of back to where we uh we started and where we're leading into, usually the spouse, typically that's where they would inherit, primarily, and then the backup or contingent would be the trust.
00:21:55.279 --> 00:21:59.680
With inside that trust, that's where you can have all sorts of control.
00:22:00.240 --> 00:22:10.400
Rolls and delays, and it depends then what is within that trust, whether or not we're gonna be dealing with any sort of taxation there, or at least on the trust side.
00:22:10.640 --> 00:22:15.119
Yeah, and I think if you have a living trust, this is important.
00:22:15.200 --> 00:22:17.759
Like we're gonna get to this in a second here.
00:22:18.240 --> 00:22:22.799
What is on the beneficiary designation form is what controls.
00:22:22.960 --> 00:22:25.279
So I don't care what you put in your will or your trust.
00:22:25.359 --> 00:22:26.480
We'll talk about that here in a second.
00:22:26.559 --> 00:22:31.359
But this beneficiary designation form is important, but you can list the trust as the beneficiary.
00:22:31.599 --> 00:22:34.079
Now, I'd say the most common is what Ryan mentioned.
00:22:34.160 --> 00:22:38.160
I'd agree with that, is if you're married, list your spouse and then list your trust second.
00:22:38.640 --> 00:22:40.720
You could just list your trust first, too, though.
00:22:40.880 --> 00:22:46.079
I'm sure your trust, if you have a spouse, probably lists your spouse as your beneficiary first, too.
00:22:46.400 --> 00:22:51.440
So it's kind of you get the same outcome in some ways.
00:22:51.599 --> 00:22:59.920
So um, but the it's just frankly mechanically easier to list your spouse and just for them to do a spousal rollover.
00:23:00.319 --> 00:23:04.640
Um but but we do like the trust second, particularly for your kids.
00:23:04.720 --> 00:23:07.440
So I would say that's the most common spouse first, trust second.
00:23:07.599 --> 00:23:18.319
If you or you could just if you're like, you know what, I I might have my surviving spouse has medical issues or um mental issues.
00:23:18.640 --> 00:23:24.960
I we I want the trustee of the trust to be involved, then you could just list the trust as the primary um directly.
00:23:25.039 --> 00:23:29.759
And if your spouse is the person that's supposed to receive that that IRA, it'll it'll function the same way.
00:23:29.839 --> 00:23:32.240
They could still receive an inherited IRA.
00:23:32.640 --> 00:23:33.920
So um, all right.
00:23:34.160 --> 00:23:35.759
Now what was the second part of that question though?
00:23:35.920 --> 00:23:44.000
The second part of the question was does the trust have to file tax returns every year if the beneficiary is not supposed to get the inheritance until 10 years later?
00:23:44.319 --> 00:23:47.440
Let me let me answer that because I it's uh it's a little confusing the question.
00:23:47.599 --> 00:23:50.160
So I think it depends on what they're trying to get at.
00:23:50.400 --> 00:23:52.079
Let's say you have a trust, okay?
00:23:52.240 --> 00:23:56.400
If you have a trust right now and you're living, it doesn't file a tax return.
00:23:56.720 --> 00:23:57.839
Nobody cares about the trust.
00:23:57.920 --> 00:24:01.359
It's the just this disregarded entity for tax purposes.
00:24:02.160 --> 00:24:11.920
Once you die, if your trust is gonna own assets, even though it's not distributing them to your kids, the trust will be filing a tax return.
00:24:12.480 --> 00:24:21.200
So if the trust is gonna stay in effect and have control of the assets, then yes, the trust will be filing a tax return, which I think might have been.
00:24:21.680 --> 00:24:23.759
I feel like that's yeah, what they were getting at for sure.
00:24:24.000 --> 00:24:25.039
And that's not the end of the world.
00:24:25.200 --> 00:24:28.880
You you're wanting this control of what of what's happening.
00:24:29.200 --> 00:24:36.799
So okay, well, let's because that question hit, um, let's go how your IRA passes at death.
00:24:36.880 --> 00:24:38.240
And why don't you go over these options here?
00:24:38.319 --> 00:24:41.359
The question kind of led us into this on how this mechanically works.
00:24:41.599 --> 00:24:41.920
Right.
00:24:42.160 --> 00:24:48.400
Yeah, I mean, the simplest way to pass is obviously you name whoever you want to inherit as the beneficiary.
00:24:48.559 --> 00:24:54.079
So if it's your spouse, mechanically, if they're listed, they'll use their death certificate.
00:24:54.240 --> 00:25:06.240
They'll go to whatever custodian houses the IRA, and then they'll have the ability to go open an inherited IRA if that's the route they go, or they will go the spousal rollover route.
00:25:06.480 --> 00:25:08.160
So that's for more so the spouse.
00:25:08.319 --> 00:25:19.200
If it's a child, whole different ballgame, it could be where they're then listed as the trust, or excuse me, they're the beneficiary of the trust, which is listed as the beneficiary.
00:25:19.359 --> 00:25:22.240
And then we're going through the trust and the terms of that.
00:25:22.400 --> 00:25:28.400
So mechanically, the biggest thing is what's on the beneficiary designation form.
00:25:28.640 --> 00:25:30.319
That trumps everything else.
00:25:30.480 --> 00:25:35.119
There's all sorts of stories, and I know on the podcast you guys have brought up some.
00:25:35.279 --> 00:25:41.119
When you go through school, you hear about all the horror stories and the ex-spouses and who knows what.
00:25:41.279 --> 00:25:51.920
What trumps is what's on the beneficiary designation form, which is why it's prudent to periodically at least review who's listed as my beneficiary.
00:25:52.079 --> 00:25:54.720
Do I even have a name beneficiary?
00:25:54.960 --> 00:25:55.440
Yeah.
00:25:55.680 --> 00:26:07.759
And I I think the just to put a really important point on this, that is like for so many people, uh, retirement accounts are some of their biggest piece of net worth.
00:26:08.400 --> 00:26:13.119
Um this is a very significant asset for most Americans.
00:26:13.759 --> 00:26:18.640
And the one document that says who gets it is not your will and it's not your trust.
00:26:19.440 --> 00:26:25.440
It is this form that you maybe filled out when you open the account, or maybe it's a separate form you filled out.
00:26:25.519 --> 00:26:30.640
You can change it anytime during your lifetime, but you need to list who the beneficiary is going to be.
00:26:30.880 --> 00:26:36.720
You can list your kids, you can list, you know, let's say you've got three kids, you could list them all to get one third.
00:26:36.880 --> 00:26:41.759
You know, you can list a primary beneficiary, your spouse, and contingent beneficiaries.
00:26:41.839 --> 00:26:47.440
If your spouse predeceases you, that then it goes to the contingent, so it would go directly to your kids.
00:26:47.599 --> 00:26:54.400
So you have a lot of options there on how to list it, but what is on that form is what's going to control.
00:26:56.079 --> 00:27:01.279
And um, and I'll just say this like I got divorced, I don't know, how long has it been now?
00:27:01.680 --> 00:27:02.640
Seven years ago?
00:27:02.880 --> 00:27:03.920
Okay, it's been a while.
00:27:04.079 --> 00:27:07.359
But I like had to redo all my beneficiary forms on everything.
00:27:07.519 --> 00:27:10.799
My retire, every retirement account, my HSA, my Roth IRA.
00:27:10.880 --> 00:27:15.920
I have two Roth IRAs, my my traditional 401k, my Roth 401k.
00:27:16.079 --> 00:27:23.599
Like I probably did like seven or eight just retirement account beneficiary designation forms, let alone your life insurance and your bank accounts.
00:27:23.759 --> 00:27:27.920
Like those things are all passing based on the beneficiary designation.
00:27:28.160 --> 00:27:30.240
So do not overlook those.
00:27:30.480 --> 00:27:33.519
Um, we see divorce, remarriage.
00:27:33.759 --> 00:27:45.119
Um, like I've we ran into the problem with someone who you know set up an account and they listed um, you know, one of their kids and now they have two kids and they never updated it to the second kid, you know.
00:27:45.359 --> 00:27:48.960
A lot of beneficiary forms will say this includes later-born children.
00:27:49.119 --> 00:27:52.559
Some of them don't, you know, and so it gets really confusing.
00:27:52.720 --> 00:27:56.720
So just make sure that they're up to date for your specific family situation.
00:27:56.880 --> 00:28:04.640
Every IRA custodian, from Fidelity to Directed IRA, you know, all of us, like we have a beneficiary update form.
00:28:04.720 --> 00:28:09.839
As long as you're still living, you'll be able to update that beneficiary designation.
00:28:10.640 --> 00:28:27.519
Um, okay, on the trust, just because we did mention that scenario of listing the trust on the beneficiary designation form, the the one requirement that if you list a trust as a beneficiary for an IRA, it must be what's called a see-through trust.
00:28:27.599 --> 00:28:29.920
Okay, and this is from IRS regulations.
00:28:30.160 --> 00:28:35.839
And a see-through trust basically means the trust document needs to say who gets it.
00:28:35.920 --> 00:28:44.319
Okay, it basically means we can look through the trust as this trust is its own little thing, but we can look through it and say, who's here's who gets it?
00:28:44.480 --> 00:28:44.720
Okay.
00:28:45.359 --> 00:28:51.039
Um, and we just have to be able to identify in the trust document who who those people would be.
00:28:51.119 --> 00:28:51.839
And that could be fine.
00:28:51.920 --> 00:28:57.200
Like you could list your trust, and your trust is pretty straightforward and says, when I die, my spouse gets everything.
00:28:57.279 --> 00:29:02.640
If or if I'm single or my spouse is pre-deceased, my kids, I got two of them, they each get 50-50.
00:29:02.799 --> 00:29:04.400
Like that, that's totally sufficient.
00:29:04.559 --> 00:29:09.039
That's identifiable of who it would be, even if there's contingencies in it.
00:29:09.279 --> 00:29:11.519
Um, that's still great.
00:29:11.759 --> 00:29:14.960
So um, or anything you'd add to the trust?
00:29:15.279 --> 00:29:31.839
Yeah, I mean, within the trust, I don't know if we're getting into it next, but the the perk of a trust beyond some of the main probate avoidance and all that is you have the ability to control who's getting what, how do they get it, when do they get it.
00:29:32.079 --> 00:29:36.319
So within IRAs, there's some predetermined rules.
00:29:36.400 --> 00:29:39.440
If your kids inherit, it's generally within 10 years.
00:29:39.519 --> 00:29:53.279
If they're minors, it's a little bit more nuanced, but ultimately there's still ways that using that trustee who's taken over after you, they can control how distributions are being made.
00:29:53.359 --> 00:29:58.640
And even after distribution, it doesn't mean the kids immediately get access to the cash.
00:29:58.799 --> 00:30:00.319
It can then be still held.
00:30:00.400 --> 00:30:06.079
Maybe it's not in an IRA currently, but it's still held for their benefit in a more controlled way.
00:30:06.240 --> 00:30:12.720
So it's still important to do the right planning via a trust so they're getting it correctly in your eyes.
00:30:13.039 --> 00:30:18.880
Yeah, and I think one common thing we've seen over the years is I think the minor child is kind of easy to see.
00:30:18.960 --> 00:30:30.000
It's like, oh yeah, my 12-year-old couldn't would know what to do with an high IRA if I passed away, or maybe your grandma or grandpa planning on passing your IRA down to a grandkid and they're, you know, they're 10.
00:30:30.079 --> 00:30:30.400
All right.
00:30:30.480 --> 00:30:30.720
All right.
00:30:30.799 --> 00:30:32.480
You're like, okay, yeah, they obviously can't do it.
00:30:32.640 --> 00:30:34.079
And I think that's pretty apparent.
00:30:34.160 --> 00:30:45.200
And that's where the the trust and the trustee can be helpful in overseeing those assets for their benefit and having a time frame to distribute them to them.
00:30:45.359 --> 00:30:53.759
But but more importantly, we've seen it with a lot of clients who are like, my kid's in their 20s, and I don't want them to get a big outright distribution.
00:30:53.920 --> 00:31:02.079
I want them to be able to really live off of this money and enjoy it and it to, you know, really elevate their entire life, not them to blow it in their 20s or their 30s.
00:31:02.160 --> 00:31:04.400
And so, how do I do that?
00:31:04.559 --> 00:31:15.039
And so we've had a common clause we'll put in our trusts is, you know, maybe some of it goes at 25 and some of it goes at 30, or it's even a third at 25, a third at 30, and a third at 35.
00:31:15.200 --> 00:31:20.960
Just so it's it's not a big outright distribution that could sometimes wreck some people financially.
00:31:21.200 --> 00:31:28.960
They they could be wasteful with it or not in a position of like financial knowledge and competence to handle that wealth.
00:31:29.200 --> 00:31:32.240
So um, so those clauses can definitely be in the trust.
00:31:32.319 --> 00:31:34.160
And I'll say some other stuff too.
00:31:34.400 --> 00:31:48.160
If they, and this is just like for a lot of stuff in the trust, and why we like them, we always recommend a trust for our clients that have assets, is you know, what if your heir has a drug or alcohol addiction?
00:31:48.240 --> 00:31:50.400
You know, you don't want to do inherit your IRA.
00:31:50.480 --> 00:31:55.119
They're gonna drain that thing, they're gonna take the lump sum on day one, that money will be gone.
00:31:55.200 --> 00:32:01.759
And now you've the problem that they had already of drug of alcohol, you've just thrown like gasoline on the fire.
00:32:01.920 --> 00:32:04.400
Um, what if they have creditors chasing them down?
00:32:04.559 --> 00:32:05.839
Well, I don't like that either.
00:32:06.400 --> 00:32:08.079
The creditor's just gonna get all that money.
00:32:08.240 --> 00:32:11.519
Whereas if it stayed in the trust, it would be protected from that creditor.
00:32:11.680 --> 00:32:18.400
Um, what are some of the things in the trust though that you think would be helpful and like for people to be considering this anyways?
00:32:18.480 --> 00:32:24.000
Because I I think it's kind of like you mentioned probate is is one good thing.
00:32:24.160 --> 00:32:28.880
I think for for IRAs, they don't go to probate anyways, but all your other assets we can maybe maybe talk about that.
00:32:29.039 --> 00:32:40.000
But but I think because people's retirement accounts are such a big part of their net worth, it it's coordinating with your trust is is so important.
00:32:40.319 --> 00:32:53.279
So that all these terms and these restrictions and these protections to make sure your wealth passes to your loved ones properly and benefits their life and doesn't harm them is is what we're trying, one big thing we're trying to do to trust.
00:32:53.440 --> 00:32:56.240
Um, what other things would you add to the trust, though?
00:32:56.400 --> 00:33:01.839
And that you're like talking to your clients about when you're setting it up, like why the why, I guess, here.
00:33:02.559 --> 00:33:06.400
Yeah, I mean, it it is pretty much everything you could possibly think of.
00:33:06.720 --> 00:33:10.799
In the simplest form, they just want to control how they get it.
00:33:11.039 --> 00:33:18.880
But some kids they don't trust, obviously, to have that sum of money just dropped on their plate and a couple hundred thousand dollars.
00:33:18.960 --> 00:33:20.240
What are they gonna do with it?
00:33:20.480 --> 00:33:25.200
But uh a lot of clients are very business focused or business owners themselves.
00:33:25.279 --> 00:33:27.920
They like rental properties, like real estate.
00:33:28.079 --> 00:33:29.039
They're in that world.
00:33:29.119 --> 00:33:36.640
So there's usually a lot of controls we're building in that kind of facilitate something in the business or rental world.
00:33:36.880 --> 00:33:50.079
So it's good to coordinate that distribution with all of that because that could be then added to additional rental properties and put to use in a more controlled way versus just giving it to the kids.
00:33:50.160 --> 00:34:04.319
And a lot of our clients, their kids, they learn the perks of having rentals and different investment assets that they can have, but it's really just the control side and maintaining that continuity with all their assets.
00:34:04.640 --> 00:34:04.880
Yeah.
00:34:04.960 --> 00:34:19.519
And you mentioned a couple of other assets that we have commonly at directed IRA and many directed IRA, sorry, we have a directed IRA and at KQS lawyers, where they do own a business or rental properties, even inside or outside their IRA.
00:34:19.760 --> 00:34:28.559
Well, those types of assets have to go to probate court when you die, even if you have a will and your retirement account passes outside of probate.
00:34:28.639 --> 00:34:36.480
As long as you have your beneficiary designation completed, if you don't have a will or a trust or anything, whoever's listed on that form, they automatically will inherit it.
00:34:36.559 --> 00:34:36.800
Okay.
00:34:36.960 --> 00:34:41.760
So that's that is actually a nice thing about retirement accounts, life insurance, bank account, investment accounts.
00:34:41.840 --> 00:34:43.599
These are what are called payable on death.
00:34:43.679 --> 00:34:47.519
Okay, whoever's on that beneficiary designation form, it's payable on death.
00:34:47.760 --> 00:34:56.239
But a lot of other assets in your life, your home, any LLCs you personally own or corporations, these things are all getting probated.
00:34:56.480 --> 00:34:58.079
All right, if you don't have a trust.
00:34:58.239 --> 00:35:11.199
Those assets you're going to a court or your loved ones are going to a court room, making a request, paying fees, paying way more for lawyers to get those assets probated and approved to pass on to the heirs.
00:35:11.360 --> 00:35:18.960
Um, so that's where like the trust is helpful because you could put your home in the trust, your LLCs would own your trust.
00:35:19.119 --> 00:35:23.039
And now we're avoiding that probate court process on all these other assets.
00:35:23.280 --> 00:35:27.840
So the the trust is kind of it, it encapsulates everything.
00:35:28.000 --> 00:35:41.519
These retirement accounts and assets that can pass by beneficiary designation form, but also all that other stuff in the trifecta that we always talk about of your business, your rental property, your home, your the land you own, whatever.
00:35:41.679 --> 00:35:44.800
It's going to own all those things and keep you outside of probate.
00:35:44.960 --> 00:35:45.519
Um, all right.
00:35:45.599 --> 00:35:50.639
Well, let me say on estate planning, um, just you know, you can work with Ryan if you want.
00:35:50.800 --> 00:35:53.440
And this today's episode is brought to you by KQS Lawyers.
00:35:53.679 --> 00:36:12.000
So, you know, they he can help you if you need it for um getting your estate coordinated, looking at your retirement accounts, other things, making sure beneficiary designation forms are done properly, getting that trust set up, which includes other powers of attorney and things like that that are all part of a coordinated estate plan.
00:36:12.079 --> 00:36:13.199
But let's go to questions, Jordan.
00:36:13.440 --> 00:36:15.199
Let's see what you got question-wise.
00:36:15.280 --> 00:36:16.960
And if you guys got questions, fire them away.
00:36:17.039 --> 00:36:17.599
That's what we're here for.
00:36:17.679 --> 00:36:19.599
We got we're gonna have another probably 10 minutes here.
00:36:19.760 --> 00:36:20.000
Yeah.
00:36:20.159 --> 00:36:32.639
Andrew Wolf uh asks, what happens to a rental property or business brought in whole, bought in whole, uh, or in part by an inherited IRA after 10 years?
00:36:33.599 --> 00:36:34.960
I mean, you'd have to sell it.
00:36:35.199 --> 00:36:36.880
So you have two options, I guess.
00:36:36.960 --> 00:36:37.760
Let's go over them.
00:36:37.920 --> 00:36:48.000
So let's say you bought real estate, you self-directed, you have a self-directed inherited IR inherited IRA and real estate or a business.
00:36:48.400 --> 00:36:52.559
Um one, you need to sell it by the end of 10 years.
00:36:53.039 --> 00:36:56.159
Um and it particularly if it's a Roth, right?
00:36:56.239 --> 00:36:59.440
We want to sell it, no capital gains tax, that'd be smart.
00:36:59.599 --> 00:37:01.360
Um, but let's say that you can't.
00:37:01.519 --> 00:37:05.760
Let's say that you're at year 10, let's say it's the Roth even, and you can't sell it.
00:37:05.920 --> 00:37:06.719
Well, what can you do?
00:37:06.880 --> 00:37:09.440
You can take you can distribute the asset to you personally.
00:37:09.679 --> 00:37:12.320
So you do what's called a distribution in kind.
00:37:12.559 --> 00:37:16.480
So what we do is we'll take the fair market value of the asset at year 10.
00:37:16.719 --> 00:37:29.119
Let's say you bought it for a million bucks, or let's say 300 grand, let's go back to that$300,000 inherited Roth IRA, we'll say, let's say you bought it for$300,000 and now it's worth$600,000.
00:37:29.519 --> 00:37:32.400
Okay, this business or real estate.
00:37:32.800 --> 00:37:34.079
And but you don't want to sell it.
00:37:34.159 --> 00:37:35.920
You're like, ah, it's not the right time to sell.
00:37:36.079 --> 00:37:37.920
The market for whatever this is not great.
00:37:38.000 --> 00:37:41.119
I think I'd do better if I could hold it for another two or three years.
00:37:41.360 --> 00:37:47.440
Well, we can just distribute it in kind at the 10-year mark, and you do it at the value at that 10 years.
00:37:47.519 --> 00:37:49.199
Let's say it's 600,000 then.
00:37:49.440 --> 00:37:53.119
Now this is you personally own it, and your basis is 600 grand.
00:37:53.760 --> 00:37:57.760
Let's say you sell it two years later for 800.
00:37:58.480 --> 00:38:01.599
Now you got to pay tax on that 600 to 800 growth.
00:38:01.679 --> 00:38:04.559
I didn't have to pay it the 300 to 600 because that was in my Roth.
00:38:05.119 --> 00:38:14.000
Um, but the the 600 to 200 as I distributed it out of the account because I wanted to go past the 10 years, you would have to pay tax on that growth and that gain.
00:38:14.719 --> 00:38:15.519
Awesome.
00:38:15.760 --> 00:38:16.159
All right.
00:38:16.239 --> 00:38:19.760
This is gonna be one of the really situational ones here, so I'm gonna go through it gradually.
00:38:20.000 --> 00:38:21.119
This is from Lynn Leatherman.
00:38:21.280 --> 00:38:22.320
It's a good question.
00:38:22.639 --> 00:38:35.440
If I inherit an IRA from a parent that was over 73 and was taking RMDs at the time of their passing, I understand that I must take RMDs and empty that account by year 10.
00:38:35.760 --> 00:38:40.639
Will the RMD amount be based on my life expectancy or that of my parent?
00:38:41.199 --> 00:38:43.440
This is gonna be a traditional account, right?
00:38:43.679 --> 00:38:45.599
They were they were an RMD.
00:38:46.000 --> 00:38:48.960
You're gonna have to pull it out over 10 years.
00:38:49.360 --> 00:38:49.840
All right.
00:38:50.079 --> 00:38:55.760
And it's so, but the the her question is is what's the life expectancy table I'm using?
00:38:56.239 --> 00:38:58.400
It's your age, okay?
00:38:58.639 --> 00:38:59.920
So you use your age.
00:39:00.079 --> 00:39:01.039
That's the short answer.
00:39:01.440 --> 00:39:01.760
Okay.
00:39:01.920 --> 00:39:10.559
I the the reason I I I mean, I I guess if you're trying to take the minimal out as possible, that's good, because you're gonna be younger.
00:39:11.280 --> 00:39:13.440
So that's better.
00:39:13.760 --> 00:39:17.599
Um, but you still are gonna have to drain the whole thing at year 10.
00:39:18.719 --> 00:39:25.679
So if again, if you're trying to be strategic on the taxes, that might you might leave yourself a large balance at year 10 to take.
00:39:26.000 --> 00:39:26.400
Got it.
00:39:26.639 --> 00:39:28.480
That was that's real-time research.
00:39:28.719 --> 00:39:28.960
Yeah.
00:39:30.159 --> 00:39:31.199
So all right.
00:39:31.360 --> 00:39:34.320
We have a question from uh anonymous attendee.
00:39:34.639 --> 00:39:42.880
Uh if the living trust is listed as as a beneficiary, will the trust be taxed for the full IRA amount at the time the owner passed away?
00:39:43.199 --> 00:39:43.440
No.
00:39:43.599 --> 00:39:44.079
Yeah.
00:39:44.320 --> 00:39:51.679
So because the the the there's no there's no tax on it unless you're over the estate tax exemption.
00:39:51.920 --> 00:39:55.360
So, which is almost, is it 16 million now?
00:39:55.760 --> 00:39:58.400
Yeah, I mean, married, it's it's north of 30 million.
00:39:58.639 --> 00:40:03.119
Yeah, so like single, 15 million, married, you can double it up for 30 million.
00:40:03.199 --> 00:40:05.679
So if you're a state's under that, there's no estate tax.
00:40:06.239 --> 00:40:12.400
The trust doesn't have income just because it received, it has an inherited IRA.
00:40:13.519 --> 00:40:18.079
If and so what let me probably clarify a few things.
00:40:18.719 --> 00:40:25.840
Most trusts are gonna say, Hey, when I pass away, I've got two kids, let's go to that$300,000 IRA.
00:40:26.000 --> 00:40:29.840
I want my two kids to get my estate 50-50 outright.
00:40:30.159 --> 00:40:30.480
Okay.
00:40:31.280 --> 00:40:35.760
I'm 70 years old, my kids are in their 40s, they're I trust them.
00:40:36.079 --> 00:40:39.440
I don't need to have withhold it unless they got some drug or alcohol addiction or whatever.
00:40:39.599 --> 00:40:41.679
But otherwise, the asset goes straight out to them.
00:40:41.760 --> 00:40:45.280
They're not like, you know, kids, they're not like minors.
00:40:46.400 --> 00:40:48.320
So this is gonna be the most common scenario.
00:40:49.119 --> 00:40:52.960
Well, each of them are gonna have the option to just get an inherited I rate.
00:40:53.039 --> 00:40:54.320
It's not gonna stay in the trust.
00:40:54.880 --> 00:41:08.079
The trust is only gonna hold on to an asset if the kid's a minor, or there's some issue with the beneficiary where they've got a creditor or the drug or alcohol addiction or some clause where you don't want that to get distributed out.
00:41:08.559 --> 00:41:18.159
Otherwise, the trust is gonna say, Hey, your two kids, each of them can go open an inherited IRA and or they can take a lump sum, but it's out of the trust.
00:41:18.880 --> 00:41:20.239
It's not gonna be in the trust.
00:41:20.559 --> 00:41:28.480
So in that sense, there's the trust doesn't have the asset, it doesn't have income, it's gonna go directly to the heir.
00:41:29.199 --> 00:41:31.039
So that's gonna be the most common.
00:41:32.079 --> 00:41:41.519
So if the trust is gonna file a tax return, it's only gonna be on assets the trust keeps, that it does not distribute out to the heirs.
00:41:41.760 --> 00:41:45.360
But that's the exception, not the norm.
00:41:45.679 --> 00:41:49.119
And that's usually with the control that we were kind of talking about.
00:41:49.280 --> 00:41:55.760
Like there's a reason we still have it in trust for some period of time for some reason.
00:41:56.159 --> 00:41:56.559
Yeah.
00:41:56.880 --> 00:42:10.400
And but but even then, let's say you had that where the the because you can have an inherited IRE in the name of a trust, um where there's still a trustee and you know governing whether it's distributions or not.
00:42:10.639 --> 00:42:17.760
And if they're if let's say they it's an RMD where they have to start distributing money, well that money would would go to the trust.
00:42:17.920 --> 00:42:19.039
It wouldn't go to the heir.
00:42:19.280 --> 00:42:28.480
The trust would hold that cash, and it could otherwise invested or hold on to it until whatever condition of restriction of control was met.
00:42:28.719 --> 00:42:38.880
You know, they went it's a drug or alcohol thing, and our trust clause says if they could get treatment and the and they resolve the issue and the trustees determination, they can distribute that out.
00:42:39.360 --> 00:42:59.760
So But usually for the way we're doing trusts with clients is you're not gonna need to worry about a trust tax return unless you have an estate issue where you have minor kids where when from when you've passed, um or there's some reason the assets need to stay in the trust to protect the asset rather than distribute the kid.
00:43:00.079 --> 00:43:01.599
So most people you don't have to worry about it.
00:43:01.679 --> 00:43:03.199
You're not gonna be doing a trust tax return.
00:43:03.360 --> 00:43:06.239
The trust is just the mechanism to get the stuff out.
00:43:06.480 --> 00:43:13.119
It's gonna pass it directly, whether it's an inherited IRA, or they're gonna deed the house or sell it or transfer the LLCs to the kids.
00:43:13.199 --> 00:43:17.760
It's it's really just a um mechanism to move the assets easily.
00:43:18.000 --> 00:43:18.239
Okay.
00:43:18.559 --> 00:43:21.920
Not a place to hold the assets, collect the income, and all that stuff.
00:43:22.079 --> 00:43:23.199
That was a long answer.
00:43:23.519 --> 00:43:26.159
No, I mean these all necessitate long answers, I feel like.
00:43:26.320 --> 00:43:26.480
Yeah.
00:43:26.639 --> 00:43:31.360
I mean, I've built by the hour, you know, so I got pretty good at taking a while to explain stuff.
00:43:31.679 --> 00:43:34.400
Let's let's let's do a uh self-directed question.
00:43:34.559 --> 00:43:36.960
Um from Steven uh Freisch.
00:43:37.440 --> 00:43:41.840
How does my self-directed IRA that holds real estate do RMDs?
00:43:42.719 --> 00:43:46.000
Okay, so this will again only apply to a traditional IRA.
00:43:46.239 --> 00:43:52.000
So if this is a rental property, your RMD is just gonna be typically your cash flow.
00:43:52.239 --> 00:43:59.760
So let's say you have the self directed IRA with the rental property and you're getting rental income, you could use that cash flow to satisfy RMD.
00:44:00.400 --> 00:44:08.639
Really, once with your first year of RMD, you know, let's you're let's say you're 73, you're in your first year of RMD, it's kind of about 4% of your account.
00:44:08.800 --> 00:44:15.440
So if you got a let's say you got a half a million dollar account, you got to take about 20 grand in RMD that year.
00:44:15.760 --> 00:44:28.239
Now, if you have multiple IRAs, like maybe you have a brokerage IRA at Schwab and you have a self-directed IRA at directed IRA that owns real estate, you can satisfy the RMD from the brokerage IRA.
00:44:28.480 --> 00:44:29.760
Okay, for both accounts.
00:44:30.000 --> 00:44:30.320
All right.
00:44:30.400 --> 00:44:34.880
You don't have to take some from the directed one and some from the fidelity one.
00:44:35.199 --> 00:44:37.199
So um or schwab, sorry.
00:44:37.360 --> 00:44:40.079
I always they're interchangeable, you know.
00:44:40.559 --> 00:44:54.719
Um now I have ran into scenarios where a client um has owned let's say raw land, okay, and they don't there's no income on it and they need to take RMD.
00:44:55.039 --> 00:44:55.920
Well, what do I do?
00:44:56.559 --> 00:44:57.679
You're gonna need to sell it.
00:44:57.760 --> 00:45:05.760
If you don't have any other account or other assets in the IRA or a brokerage IRA that you can satisfy the RMD from, you may have to sell the asset.
00:45:06.639 --> 00:45:12.880
Um and if that that that's not something you're willing to do because again, maybe it's market conditions, it's not the time.
00:45:13.760 --> 00:45:24.559
Um, you can do a in-kind distribution where you take a portion of the property, you could take a tenant in common interest and deed it from the IRA to you.
00:45:25.039 --> 00:45:29.440
So let's say the property's worth$100,000.
00:45:30.800 --> 00:45:42.639
Let's say you need to take a$4,000 RMD this year, you could deed yourself a 4% undivided interest from the IRA to yourself personally, and you've basically got the RMD by doing that.
00:45:42.960 --> 00:45:46.079
That is the nuclear option game.
00:45:46.480 --> 00:45:47.760
I do not recommend that.
00:45:47.840 --> 00:45:50.639
You're gonna need an appraisal, it's gonna be a pain in the ass.
00:45:50.880 --> 00:45:54.880
Deeds redone, do not do that unless you have to.
00:45:54.960 --> 00:46:00.960
But I've had to do it maybe two or three times my entire 25-year career almost doing this.
00:46:01.119 --> 00:46:03.280
So it's probably important to plan.
00:46:03.519 --> 00:46:08.320
I I'd like to think you would know this prior to them passing.
00:46:08.480 --> 00:46:22.800
You would like to think, like, if they're getting up there in age, maybe don't lock up my IRA that is potentially already in RMD mode in some illiquid property or investment that's not going to be paying the RMDs on.
00:46:22.960 --> 00:46:27.679
So it may be somewhat foreseeable that we can avoid that issue.
00:46:27.920 --> 00:46:30.719
Um, we have a question from Karen Baumgarten.
00:46:30.960 --> 00:46:38.480
Karen asks, My SD 401k consists of illiquid assets, throwing a solid revenue stream.
00:46:38.719 --> 00:46:39.599
No kids.
00:46:39.840 --> 00:46:46.719
Do I designate heirs by individual assets or hire some third-party trustee to manage the distributions?
00:46:47.039 --> 00:46:49.760
Ultimately, I think she could go either route.
00:46:49.920 --> 00:46:54.000
She could distribute each asset to whoever she wants.
00:46:54.159 --> 00:46:57.760
It I think it a little bit depends on her age and where she's at.
00:46:57.920 --> 00:47:09.840
I mean, life expectancy if she's later in life, maybe start to consider options with these illiquid investments and figure out what we can do to maybe unwind those a bit.
00:47:10.159 --> 00:47:16.239
But um, yeah, I would say the biggest thing is let's do some planning now.
00:47:16.719 --> 00:47:21.679
Yeah, I think it kind of depends on like who do you want to receive these assets when you pass?
00:47:22.000 --> 00:47:29.280
And I think what I kind of just like unpack a little bit with what Ryan said is like, you know, having illiquid assets is fine.
00:47:29.360 --> 00:47:32.559
Like they're sounds like they're good assets, they're producing income.
00:47:32.880 --> 00:47:34.159
You like them, right?
00:47:34.239 --> 00:47:37.039
For you, but do are do your heirs like them?
00:47:37.199 --> 00:47:41.039
You know, and this is a conversation we have to have with a lot of our clients at Gekeo Slawyers.
00:47:41.199 --> 00:47:44.239
It's like, you're a business owner, but are your kids gonna run this business?
00:47:44.400 --> 00:47:46.079
Oh, you've got 10 rental properties.
00:47:46.239 --> 00:47:48.480
Are your kids gonna like managing 10 rental properties?
00:47:48.559 --> 00:47:50.000
And they're like, no, yeah.
00:47:50.159 --> 00:47:55.280
So, like, so let's think about how these assets look to who your heirs are.
00:47:55.440 --> 00:47:58.239
Now, you might be someone that's like, well, my kid works in the business, of course.
00:47:58.320 --> 00:48:00.000
Well, yeah, my kids are involved in the rental properties.
00:48:00.079 --> 00:48:01.599
They've got their own real estate too.
00:48:01.760 --> 00:48:02.239
Great.
00:48:02.400 --> 00:48:04.639
They'd probably love to inherit your real estate.
00:48:04.960 --> 00:48:17.599
But once you can identify who your heirs are and what that dynamic's gonna look like, then you can figure out what you want to do with the assets because it's really gonna depend on them as as much as anything.
00:48:17.840 --> 00:48:27.119
Now, I have had clients, and I'll probably say the the the distributing assets to specific people, I don't know that I love that.
00:48:27.280 --> 00:48:28.960
I've had clients do that.
00:48:29.199 --> 00:48:46.880
I had one client had a very significant self-directed Roth account, like maybe like five or six million dollars, and he wanted to distribute it to his kids by property, so he'd be like, and it had, you know, let's say eight or nine properties in it.
00:48:48.000 --> 00:48:49.679
And it had some notes in it too.
00:48:49.760 --> 00:48:57.039
And he's like, all right, so this kid's gonna get this little basket of these properties and these notes, and this kid's gonna get these ones and these ones.
00:48:57.199 --> 00:49:04.000
And then when we looked at it, and as he's kind of going year to year after it, it's like the value shifted on all this stuff.
00:49:04.239 --> 00:49:17.519
He ends up selling one, one note gets paid off, and now what he planned for now, three years from now, kind of looks pretty dumb because he got super asset specific, and he's got new assets in there that he didn't say who's getting what.
00:49:17.679 --> 00:49:19.840
And it's like I just don't love that.
00:49:20.000 --> 00:49:22.719
It sounds good, but you're not dying tomorrow.
00:49:22.880 --> 00:49:25.039
Like this is this is gonna be fluid.
00:49:25.199 --> 00:49:27.760
So I like more percentage-based, right?
00:49:27.920 --> 00:49:46.079
You know, and you could say in the truth, like even you could say in the trust something like, you know, I want them to actually, I don't want the assets to be liquidated and sold, which is a lot of a lot of trusts are gonna say, hey, whatever, if you own real estate or stocks or whatever, we're just gonna sell all those assets and distribute the cash to theirs.
00:49:46.480 --> 00:49:48.880
Um, you might say, don't do that.
00:49:49.119 --> 00:50:01.920
Just distribute the assets specifically to the kids in equal amounts, and then, because you could know what that is when they when you pass, you can kind of set values on them and then tidy it up with the cash to make sure there's a fair fair allocation.
00:50:02.000 --> 00:50:10.320
So that if you know, you had two properties and one was worth a million dollars and one was worth a hundred thousand and one gets one and the other gets one, it's like, well, that wasn't very fair.
00:50:10.480 --> 00:50:14.320
You you kind of can settle the difference with with cash or other assets.
00:50:14.480 --> 00:50:17.440
So you can get really specific on this.
00:50:17.679 --> 00:50:36.480
I tend not to love that unless they're like sentimental assets, like you know, this could be like the musical instruments or the guns, or maybe there is a kid involved in the in a certain business or a property, or you own the boat with the brother, and the brother's gonna specifically get the boat or whatever, you know.
00:50:36.559 --> 00:50:40.079
I don't know what it is, but like that those be specific on the asset.
00:50:40.159 --> 00:50:48.320
But I think in your retirement account I've just seen it cause more messes than than the like goal was intended.
00:50:48.559 --> 00:50:49.119
Right.
00:50:49.840 --> 00:50:50.159
Okay.
00:50:51.039 --> 00:50:53.199
Um, another anonymous question here.
00:50:53.519 --> 00:51:05.039
Um regarding the see-through provision you mentioned when listing the trust as the beneficiary of the IRA, does the trust have to explicitly state which specific beneficiary gets IRAs?
00:51:05.679 --> 00:51:09.440
Or is typical language allocating the estate in general sufficient?
00:51:11.039 --> 00:51:28.880
Yeah, as I understand it, general language in the sense where like, let's say it says to my kids per sterpees, which means like all my kids get an equal share, that should generally be fine versus like a very broad statement, or listing them by name, that should apply or be allowable.
00:51:29.199 --> 00:51:29.599
Yeah, exactly.
00:51:29.679 --> 00:51:34.800
And you don't have to say like the trust doesn't need to say like so-and-so gets my IRA.
00:51:35.039 --> 00:51:48.480
The trust just needs to say, like, if you listed your so you have your beneficiary designation form and you listed your trust as the beneficiary, like you know, the the Sornson Living Trust or the Blackbriar Trust, whatever.
00:51:48.880 --> 00:51:51.519
Like that's what's listed on the beneficiary designation.
00:51:51.840 --> 00:51:59.119
Then when you look at the trust, the trust doesn't have to say, oh, this IRA, a directed IRA goes to John.
00:51:59.440 --> 00:52:00.320
It doesn't need to say that.
00:52:00.960 --> 00:52:08.159
What the trust just has to say, and what that see-through provision means is John is the beneficiary, John receives my estate.
00:52:08.559 --> 00:52:11.760
It doesn't need to say specifically the IRA or reference the IRA.
00:52:12.239 --> 00:52:16.800
Um or it could say John and Sally 50-50 or whatever, it doesn't matter.
00:52:16.960 --> 00:52:19.519
You just have to have the name and it be identifiable.
00:52:20.159 --> 00:52:21.840
Most people's trusts already have that.
00:52:22.000 --> 00:52:29.280
Like most trusts are like a 99% of trusts are automatically see-through trusts because people want to be clear who's gonna get their estate.
00:52:29.599 --> 00:52:34.639
Sometimes it's not though, where it's the and you in fact, you don't even have to list the person's name.
00:52:34.800 --> 00:52:51.760
They just have to be what's called readily identifiable, meaning by definition, like like you could figure out who they are if it's like you put per sterpees in there and it's not clear who it is, or there's you have a provision that says later born children are automatically included and the child child's name wasn't in there.
00:52:52.000 --> 00:52:56.239
Well, the trust automatically picks them up, so they're deemed readily identifiable.
00:52:56.400 --> 00:53:00.400
So um so I wouldn't stress too much about that.
00:53:00.639 --> 00:53:07.679
I would I have yet to come across a trust that we've done that isn't automatically a see-through trust, anyways.
00:53:08.079 --> 00:53:10.000
So you're you'll you'll get that met.
00:53:10.559 --> 00:53:17.199
But be clear about obviously and be a little intentional about making sure the beneficiary designations are are updated.
00:53:17.599 --> 00:53:22.400
And if you have a trust, that's probably part of the in fact, we should probably talk about funding the trust.
00:53:22.880 --> 00:53:26.400
So your your trust, so this is the way the trust works.
00:53:27.360 --> 00:53:30.480
Your trust is gonna say who gets your stuff, right?
00:53:30.639 --> 00:53:32.800
And then under what conditions.
00:53:33.119 --> 00:53:37.679
But after you've signed that trust, you have to do what's called funding the trust.
00:53:37.920 --> 00:53:40.079
Maybe you can explain what like that funding the trust means.
00:53:40.239 --> 00:53:40.400
Right.
00:53:40.480 --> 00:53:43.760
And it's just it in the simplest way, it's how do we get everything into it?
00:53:43.840 --> 00:53:45.840
How do we get it under the trust umbrella?
00:53:46.079 --> 00:53:53.920
And the two main mechanisms are let's say with like real estate titling assets you can put title on to be in the name of the trust.
00:53:54.000 --> 00:54:02.480
So you would deed your property to the trust versus like an account, like a life insurance policy and IRA of 401k.
00:54:03.119 --> 00:54:06.079
You can't retitle those to be in the name of the trust.
00:54:06.239 --> 00:54:08.719
What you do is you update the beneficiary.
00:54:08.960 --> 00:54:20.800
So you're going to the custodian, which is like directed IRA or Fidelity or Schwab, and you're updating behind the scenes who inherits the account after you.
00:54:21.039 --> 00:54:21.199
Yeah.
00:54:21.280 --> 00:54:24.880
And a lot of people are like, so do I need to change the name of the account in the trust?
00:54:24.960 --> 00:54:25.760
No, no, no, no.
00:54:25.920 --> 00:54:30.079
Just update the beneficiary designation form that says when you die, who gets it?
00:54:30.159 --> 00:54:31.840
And you can just list the trust there.
00:54:32.000 --> 00:54:34.000
All right, let's maybe take two final questions.
00:54:34.239 --> 00:54:34.480
Okay.
00:54:35.039 --> 00:54:35.199
All right.
00:54:35.599 --> 00:54:36.079
You got two?
00:54:36.320 --> 00:54:37.039
Yeah, I'm okay.
00:54:37.199 --> 00:54:40.159
And we only got two minutes, so see how fast we can okay.
00:54:40.400 --> 00:54:41.840
We'll be more, we'll be more concise.
00:54:42.000 --> 00:54:43.119
And by me, I mean me.
00:54:43.360 --> 00:54:46.400
I I like this question from Bill Whitick.
00:54:46.559 --> 00:54:49.280
Um, it's uh I have a revocable living trust.
00:54:49.440 --> 00:54:53.679
Uh, my life partner, uh, not formally married, is the beneficiary.
00:54:53.760 --> 00:54:58.719
If I pass first, please share tax repercussions and anything I should be aware of.
00:54:59.119 --> 00:55:01.440
Well, yeah, she's not married to him.
00:55:01.519 --> 00:55:13.360
She's treated no differently than kids, grandkids, essentially any other non-spouse in the eyes of the law, she's not married to him, so she wouldn't get that treatment.
00:55:13.599 --> 00:55:17.840
So she would have the 10-year rule or any of the other rules we talked about today.
00:55:18.159 --> 00:55:26.880
Yeah, and I think, you know, anyone that's in that life partner scenario, that's, you know, that the tax rules just aren't that great when dying.
00:55:27.039 --> 00:55:42.239
I mean, there are a lot of great perks under the tax law when you die and you and you die married, your spouse gets to inherit a lot of your assets and get something called, well, I guess you still get step up in basis outside your retirement account.
00:55:42.400 --> 00:55:45.840
But like this spousal rollover rule doesn't apply.
00:55:46.239 --> 00:55:53.679
You can't double up the estate tax exemption um between your joint assets.
00:55:54.000 --> 00:55:59.840
So I it's uh not that I'm trying to tack you into getting married necessarily, but there are the perks, you're just not gonna get them.
00:56:00.000 --> 00:56:01.519
Spousal rollover is one.
00:56:01.840 --> 00:56:05.119
Um, but the other thing is step up and basis.
00:56:05.280 --> 00:56:12.239
You could actually still your heirs, no matter spoused or not, they kill still get a step up and basis on your assets when you pass.
00:56:12.480 --> 00:56:16.559
That doesn't really apply to your IRAs, but yeah, but that's a little perk too.
00:56:16.639 --> 00:56:17.280
We can go over that.
00:56:17.360 --> 00:56:31.519
I mean, the the the what I would say is um I I think some of the most important scenarios for people to plan for with their estate is life partner scenarios because the laws are working against you.
00:56:31.760 --> 00:56:44.159
Like you may want your life partner to receive the majority of your assets, but if but like the law, the default provisions in the law if you don't have a well-planned estate is not that is that they're gonna get absolutely nothing.
00:56:44.400 --> 00:56:53.280
Like the default provisions are that your spouse, if you have one, if you don't, your kids, if you don't have kids, then your parents, if your parents have predeceased you, then your siblings.
00:56:53.360 --> 00:56:59.440
There's this whole order that's that's just the default in the law and who gets your assets when you don't have a an estate plan.
00:56:59.760 --> 00:57:01.840
So that's a critical scenario.
00:57:02.000 --> 00:57:07.519
Super, super critical that you have well planned and coordinated, that you have an estate plan and that your life partner has one too.
00:57:07.599 --> 00:57:12.079
So it's like a two-way street, and you can be doing it together at the same time to make sure that they're coordinated.
00:57:12.320 --> 00:57:18.639
The other one would be um divorce scenarios, people that have a yours, mine, and ours situation.
00:57:18.800 --> 00:57:19.440
That's me.
00:57:19.599 --> 00:57:26.960
Like I've divorced, I've got my kids from a prior marriage, my spouse has her kids from a prior marriage, we have assets that are, we got the yours, mine, and ours assets.
00:57:27.119 --> 00:57:31.440
Like those are can get a little complicated, and without proper planning, stuff gets jacked up.
00:57:31.519 --> 00:57:34.639
And what you typically have intended and wanted isn't what's going to happen.
00:57:34.800 --> 00:57:38.800
So, um, so it's a good opportunity, I think, to just think about your estate.
00:57:39.039 --> 00:57:41.519
Again, inherited IRAs are a big part of that.
00:57:41.679 --> 00:57:44.159
We do those accounts at directed IRA.
00:57:44.320 --> 00:57:45.760
So let me just show that slide there.
00:57:45.920 --> 00:57:51.519
If anybody's interested in doing an inherited IRA, if you already have an inherited IRA, you've thought about self-directing it.
00:57:51.760 --> 00:57:54.719
We do quite a bit of inherited IRAs at directed IRA.
00:57:54.800 --> 00:57:59.679
You can book a call with our team to speak to them on how those work and answer any questions that you might have.
00:57:59.760 --> 00:58:01.119
Use that webinar 50 code.
00:58:01.199 --> 00:58:03.039
That'll save you 50 bucks.
00:58:03.199 --> 00:58:12.239
And if you kind of need to get your shiz together on your state plan, you're like, I don't know that I thought this through these beneficiary designations, who's getting my stuff, my retirement account, my other assets.
00:58:12.400 --> 00:58:13.519
Ryan is here to help.
00:58:13.679 --> 00:58:14.800
You can book a call with him.
00:58:14.960 --> 00:58:16.239
I made him put his email in here.
00:58:16.320 --> 00:58:17.280
He put his assistance email.
00:58:17.360 --> 00:58:18.639
I'm like, put your email in there.
00:58:18.719 --> 00:58:20.559
Like, that's shoot me an email.
00:58:22.559 --> 00:58:22.960
Phone number two.
00:58:23.119 --> 00:58:24.079
Why don't we throw a yeah?
00:58:24.159 --> 00:58:25.280
Let's put your cell in there.
00:58:27.199 --> 00:58:30.239
No, Ryan's assistants, Kennedy, too, who's great to work with.
00:58:30.400 --> 00:58:34.239
But um, but yeah, that you got Ryan's personal email there.
00:58:34.400 --> 00:58:35.119
Don't abuse it.
00:58:35.360 --> 00:58:36.159
Shoot me an email.
00:58:36.320 --> 00:58:44.079
Don't abuse it, but book a call with them, get your estate plan going, or if we any other tax or legal planning, you might need us comprehensive tax consult as well.
00:58:44.239 --> 00:58:54.079
We just want to be a resource with you, though, whether you're just attending here to get educated, stay up to speed on what's going on, making sure you're being savvy about how you're managing your finances and building wealth.
00:58:54.159 --> 00:58:59.679
Um, please make sure you're subscribed to our newsletters so that you get updates on upcoming webinars.
00:58:59.840 --> 00:59:04.159
This webinar, since you are subscribed to this, you'll be on our newsletter list, right?
00:59:04.239 --> 00:59:06.639
And you'll get an email when the recording is available.
00:59:06.719 --> 00:59:10.239
So if you missed any parts of this, you'll be able to catch it or you want to share with your friends or family.
00:59:10.400 --> 00:59:17.039
Okay, and then the last announcement here is our alt asset summit is coming up October 22nd, 23rd.
00:59:17.119 --> 00:59:19.119
That'll be in Costa Mesa, California.
00:59:19.280 --> 00:59:27.360
Go to altassetsummit.com, two-day event going through common alternative assets, ways you can invest and grow your wealth outside the stock market.
00:59:27.599 --> 00:59:42.719
We're gonna have some financial advisors there, accountants, attorneys, of course, and then people that have expertise in certain assets from real estate to oil and gas to crypto to private equity venture, all these different assets that people invest in outside the stock market, small businesses.
00:59:42.800 --> 00:59:44.159
We'll be covering that too.
00:59:44.239 --> 00:59:48.000
Um, so great time, incredible people to go network with as well.
00:59:48.159 --> 00:59:51.760
So go over to altassetsummit.com to learn more about that event.
00:59:51.920 --> 00:59:53.440
Thank you everyone for being here.
00:59:53.599 --> 00:59:54.559
We will see you next time.
00:59:54.719 --> 00:59:57.039
Until then, stay calm, self direct on