The secular trust revisited

Article Abstract:

IRS Letter Rulings issued in Feb and Mar 1992 questioned the viability of secular trusts as nonqualified deferred compensation planning tools despite a previous Ruling that treated them as grantor trusts. The Rulings concluded that treating secular trusts as grantor trusts was inconsistent with IRC section 404(a)(5) rules, a separate account is required for employers to take a deduction and the vested accrued benefit is taxable each year. However, a secular trust funded by life insurance from which the employee can withdraw any amount contributed by the employer in 30 days is still a viable tool.

Employee benefits

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Special needs trust: an estate planning tool for the disabled

Article Abstract:

Special needs trusts seek to provide funds for extra items and services for a disabled or non-competent child while shielding the funds from Medicare and other public providers. These agencies often move aggressively to secure such funds, and the law presumes in their favor, so extreme care is needed in advising and preparing such instruments. The trustee must be completely independent and must not be given powers leading to the loss of public assistance.

Disabled children, Estate planning, Disability insurance

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Retirement distribution planning with trusts

Article Abstract:

Trusts can be valuable retirement planning tools because they allow for targeted bequests, prevent difficulties with the beneficiary using all the money in a short time and reduce the complexity of tax planning in retirement. However, the IRS rules and letter rulings need to be carefully followed to prevent negative tax consequences, especially when the trust beneficiary is not the spouse. An example of incorrectly using a trust is provided.

Trusts, Funds, Trusts, and Other Financial Vehicles, Retirement planning

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