IRA Owners Need-to-Knows

how to unlock the ultimate estate plan

How to unlock the Ultimate Estate Plan

When you find your critical financial decisions warrant professional counsel and advice.

Speaker 1:           From the Clear Channel Studios, a Professional Edge by scene G Todd Tax Attorney CPA and Certified Financial Planner is providing general information related to taxes, investments, and estate planning. This information is not to be perceived as providing individual legal, tax or investment advice as each individual’s circumstances are unique. Being a listener does not create an attorney slash CPA or an investment advisory client relationship. Each individual’s personal situation is different and seeking one-on-one advice, whether a [00:00:30] licensed professional is recommended, securities and fee only investment council is provided through Schwab Institutional Member S I P C. This is Professional Edge, a program designed to help you understand the importance of getting counsel and advice from a licensed professional and help you appreciate the significance of being able to integrate your investments, tax planning and estate planning into one cohesive plan to prevent an unintended consequence. We will be talking with Scene G Todd of Estate Management Counselor’s, llc.

Speaker 1:           Estate Management Counselor’s, [00:01:00] LLC is an independent fee only investment management firm based in Atlanta with a satellite office in Columbus, Georgia that serves select clients throughout the country. Their goal is simple to make sure their clients feel confident and secure about their financial future. Seen is a truly qualified professional. He is a licensed tax attorney, a CPA and certified financial planner. He is also an adjunct income tax professor at the University of Georgia. One unique thing you might not know about scene, he attends the National Rodeo Finals. [00:01:30] Each year we will be talking with scene.

Speaker 2:           Good morning Chris. How are you today?

Speaker 3:           Good morning, scene. Doing well. How about you? Good.

Speaker 2:           Good. Did you tune in to the Kentucky Derby for Saturday in May?

Speaker 3:           I did

Speaker 2:           Not. No. Most exciting. Two minutes in sports.

Speaker 3:           That was riding roller coasters

Speaker 2:           Call to run for the Roses

Speaker 3:           <laugh> that was riding my rollercoaster run for the Roses <laugh>. How was

Speaker 2:           It? It was exciting. Cool. So, uh,

Speaker 3:           I always hear people talk about it, but I’ve never, never done that

Speaker 2:           One. We used to go to it. Mm-hmm. <affirmative>, uh, every year [00:02:00] my wife is on this, uh, committee. Mm-hmm <affirmative> and for a fundraiser for my daughter’s dance school. And she is done this year. So we can now make the journey back to the, uh, Kentucky Derby. Congratulations.

Speaker 2:           Yes. I, I’m very excited. Yeah. Cuz it’s been sort of this hiatus mm-hmm. <affirmative> that we’ve been away and it’s just a neat event. It is, um, one of those bucket list things that you gotta do to go see experience because it is, you know, [00:02:30] from the grand stand, you see it on tv, you know, the celebrities, uh, some Arabian, you know, Saudi Arabia individuals come over. So it’s this mix of people and then you go all the way down to me, the common person mm-hmm. <affirmative> that just is there for the event and the day. Nice. So it’s, uh, a great event That’s

Speaker 3:           Good to get away and spend some time with the family and then just have a good time. Yes.

Speaker 2:           So back to reality. Mm-hmm. <affirmative>, we’re gonna talk a little bit about, um, IRA owners [00:03:00] and the things that they need to know as an IRA owner. And the reason why we say this, Chris, is because most IRAs or 401ks are the largest financial asset that listeners have out here. Mm-hmm. <affirmative> and they have about zero planning or zero understanding of what this actually can do. Mm-hmm. <affirmative> or cannot do. Mm-hmm. <affirmative>, how they can fall into the bear trap and actually lose half of their ira. Yeah. Point blank. There’s

Speaker 3:           Not something you wanna do.

Speaker 2:           No, no. So as a listener, you know, [00:03:30] stay tuned because we’re definitely going to give you some things that you need to know, but Chris, even if you know it mm-hmm. <affirmative>, you have to implement it. Right. Okay. I can give you the touch keypad code to unlock the safe and if you never put ’em in,

Speaker 3:           It’s not gonna open

Speaker 2:           Itself. It’s not gonna open. Nope. Right. So I can give you the information, but

Speaker 3:           If you do have that code, can you

Speaker 2:           <laugh> he’ll let you know, write it out. A little slip of paper. <laugh>. Yeah. So this, this is the [00:04:00] same thing that we’re talking about. You’re hearing this information during this show, the professional edge, and you, you know, in the back of your mind you’re not doing something but then you know what lunch is served. Mm-hmm. <affirmative> dinner served. Yep. It’s Monday morning, it’s on to the routine. So you gotta take this information and actually implement it and apply it and take action on it. Mm-hmm. <affirmative>, that’s the key difference of a lot of our listeners out there. [00:04:30] The ones that we get the chance to meet with Chris, we look at it, we provide ’em with the information and then they actually implement it. Mm-hmm. <affirmative>, because you and I both know, everyone out here is busy with life. Yep. And doing this kind of stuff is not what they do every day.

Speaker 2:           This is what we do every single day. Okay? Mm-hmm. <affirmative>. So it’s easy for us to implement that with the client’s permission. So we say, you need to do this, we’re gonna get it done for you, [00:05:00] we’re gonna do this. Right. We’re gonna get it done for you because we know this is what you need to get done. Mm-hmm. <affirmative>. So it’s the taking this information that you receive, the things you need to know as an IRA owner and actually implementing those on your own personal situation. Mm-hmm. <affirmative>. Okay. Because as we go forward, we know right now 10,000 people, and I’m gonna hone in on this for the rest of 2013. It’s [00:05:30] another stat <laugh>,

Speaker 3:           It’s still just hard to to fathom that amount of people

Speaker 2:           Per Right. 10,000 people per day are blowing out their 65th birthday candles. And it’s not just for 2013 mm-hmm <affirmative>. It is for the next 16 years.

Speaker 3:           Wow. It’s hard to wrap your head around it.

Speaker 2:           Right. And and do you think social security is under stress now?

Speaker 3:           <laugh> <laugh>. Yeah. [00:06:00] Just late right

Speaker 2:           Now. Now put this number in, in a concept. Mm-hmm. <affirmative> go 16 years and everyone is surviving mm-hmm. <affirmative> for 16 years. Look at the number of people that are going to get a social security check. 10,000 per day for the next 16 years. That’s a lot. That is a lot of social security checks. Have we

Speaker 3:           Done the math to see how many numbers that or how many people it

Speaker 2:           Is? I’ll do that for next show. Okay.

Speaker 3:           I’m curious. I can’t count that [00:06:30] high <laugh> because I know it’s a lot. So you, it’s just hard to wrap your mind around it. Right.

Speaker 2:           It really is. And, and these people turn in 65 mm-hmm <affirmative>, um, they either have a defined benefit plan, meaning a company pension or they have now been the lucky recipient of these defined contribution plans. Mm-hmm. <affirmative>, which are 401ks. Mm-hmm. <affirmative>. So now the company has shifted that risk of putting away enough money onto the worker [00:07:00] because before underneath the defined pension plan, then the company has that obligation to continue. Now think about this Chris, as a company doing these defined benefit plans, they have actuaries that are running numbers on longevity and on risk and on rates of return for obligating the company to put X dollars away into this defined benefit plan. Okay? Mm-hmm <affirmative>, now [00:07:30] we have shifted to their contribution plan. Defined contribution. They put X dollars in, that’s it, they’re done. They don’t have any more responsibility. Mm-hmm <affirmative> now who’s doing the calculation on the longevity risk and the rate of return risk on the portfolio and the sustainability of that.

Speaker 2:           Not the four [inaudible] participant, not our listener out there. No. So who’s burden is that now it’s actually on the participant. [00:08:00] Mm-hmm. <affirmative> the employee. You know what, they’re not running the numbers. Right. We’re seeing it. So therefore there is the impetus to make the call. So we can run that number to say, you know what, you putting away X dollars per year for the next number of years that you work. Mm-hmm. <affirmative> is going to provide you with the opportunity to make X dollars of withdrawals over your life. Mm-hmm <affirmative>, that number has to be run. And out of the individuals that are out here listening, Chris, it’s a [00:08:30] very, very small number that have actually sat down and run that number. Mm-hmm. <affirmative> on what it’s gonna take to have them sustain their retirement. Right. That’s the challenge folks. Mm-hmm <affirmative>, the ones that are the smart listeners are making the call to Tina (877) 654-9798 Number again 8 7 7 6 5 4 9 7 9 8 making the opportunity to get that number ran and understand [00:09:00] the impact of their savings or under savings on what it’s gonna be in their retirement. Right. So make the call.

Speaker 3:           That’s all you got to do. Make it much easier on you because if you, if you keep sitting and waiting,

Speaker 2:           Time is going along,

Speaker 3:           It’s gonna go and you can’t

Speaker 2:           Come back. Time, time is the equalizer for all of us, Chris. Mm-hmm <affirmative>, it doesn’t matter whether you have a million dollars today or you have $1 time is the same for everyone. Mm-hmm <affirmative>, it’s what you do with that time. That’s the differentiator. [00:09:30] So you gotta put time on your side. So there’s the other thing on getting individuals to act on the information on the need to knows as an IRA owner, but again as an estate planning tax attorney, I say this because IRA things to know has to do with a lot of estate planning because it’s the most valuable financial asset that most listeners have out there. Mm-hmm. <affirmative>. And this unfortunately is not [00:10:00] controlled by a will. Not controlled by a trust. Right. It’s controlled by a beneficiary designation. And real quickly, Chris, here’s one thing they need to know. Is your beneficiary properly designated on your IRA or your 401k?

Speaker 2:           Now most companies, they’ll sign you up and you’ll put spouse first. Boom, nothing on contingent husband or wife go out on date night. Mm-hmm. <affirmative> severe car accident. Both of ’em don’t [00:10:30] make it home. Where’s it go now State goes, you’ve been listening. Oh yeah. It goes to the estate. The estate does not Well and let’s say there’s two kids at home, right? Mm-hmm mm-hmm <affirmative>, it goes to the estate and the estate doesn’t have a life and you say, wait a minute, doesn’t have a life, it’s got two kids back here at home. Well unfortunately the IRS says that you can’t put these two kids on that contingent beneficiary line. Hmm. So therefore it becomes the estate. Mm-hmm [00:11:00] <affirmative>. And if the estate has zero measuring life, then by law that IRA has to be distributed within five years date of death. Hmm. So this tax deferral strategy, you just blew it. Mm-hmm. <affirmative> and you collapsed it to pay the tax on all this money in five years. So now we gotta get it distributed within five years. We gotta add all this additional income in and maybe for sure we’re gonna impact [00:11:30] the tax rates on the beneficiary. Mm-hmm <affirmative>, that’s one thing you need to know as an IRA owner, is your beneficiary properly designated?

Speaker 3:           And if it’s not, you need to fix it. That’s right. Yep.

Speaker 2:           This is scene Todd and with the professional edge

Speaker 3:           As always, we’re gonna get in touch with scene. Good time to call 8 7 7 6 5 4 97 98 8 7 7 6 5 4 97 98. The website to uh, check out emc and you can also send in your question via [00:12:00] email, send that to coming up during the show today, we will have another giveaway.

Speaker 1:           Excellent.

Speaker 3:           We are just handing out stuff like crazy. So we’ll have that before the uh, show wraps up this morning. So be sure to stay with us. We’ll have more of the professional ledge right after this.

Speaker 1:           We’ve all thought about it. Everyone listening will need one. Not having one can cause untold heartache, [00:12:30] family conflict escalating to the point of a lawsuit. One simple thing that avoids all that. An effective estate plan. As a practicing tax attorney seen, Todd with estate management counselors has completed over 1000 estate plans during his 15 years of professional practice. He can help you implement an effective state plan, coordinate your financial accounts and make sure you have named the proper beneficiaries to maximize your tax savings. Call 8 7 7 6 5 4 97 98 today and let [00:13:00] tax attorney scene Todd help you implement an effective estate plan. Call 8 7 7 6 5 4 97 98. Today with today’s financial markets, are you getting the personal and professional attention you and your money deserve? Clients of estate management counselors benefit from having one set of professionals advise them on their tax estate planning and investment advice. We call that the professional edge scene. Todd is a tax attorney, CPA and certified financial planner. With over 15 years experience, he welcomes [00:13:30] the opportunity to assist you in preparing for retirement, implement effective tax planning strategies and to help you properly plan your estate. His radio show the professional edge is aired weekly on Sundays at 9:00 AM If you are interested in meeting with scene call his office at (877) 654-9798. That’s 8 7 7 6 5 4 97 98.

Speaker 4:           Oh. Hello. Love the colorful.

Speaker 3:           [00:14:00] I figured since it is the first weekend of May we’re running through the summer. Summer. Yes. We are eagerly awaiting its arrival. Yes. I guess, I don’t know, as long as I have air conditioning and stay inside I’m good because I can’t breathe when it just gets hot. Asthma. Asthma and the heat and humidity and all. I, you know, it ruins my rollercoaster adventures cause I have to stop and and use the inhaler to walk every three feet, you know. But I enjoy the summer though, [00:14:30] <laugh>. Yeah. I like a lot better than cold weather for sure. Yeah, you can do that. Hey, welcome back to the show and as always, if you would like to get in touch with scene, the number to call is (877) 654-9798. Keep that phone number handy cuz we have a giveaway that uh, we’ll take care of before the end of the show. We might even do it here in a few minutes. You just never know. Just gotta stay tuned

Speaker 2:           When the notion strikes, we’ll do it <laugh>. Right. So we’re back to IRA owners and the things you need to know mm-hmm <affirmative> and some of the things, you know, in 2013 [00:15:00] the contribution limits is the smaller of earned income or $5,500 for individual listeners out there. Or if you’re 50 years or older, then it becomes 6,500. So married, couple age 51 each can contribute $13,000 total. Mm-hmm <affirmative>, but we also gotta have earned income enough and that’s a term of art in the tax code and it basically says that portfolio income or interest interesting [00:15:30] come do not count towards the contribution. So if you’re fortunate enough to be a trust fund individual mm-hmm <affirmative> and you only receive interest in dividend, you cannot make a contribution to a regular IRA or a Roth ira. So that’s something you gotta have that is a earned income limitation. So another thing you need to know as an IRA owner is the required [00:16:00] distribution date.

Speaker 2:           Mm-hmm <affirmative> at age 70 and a half a IRA owner is required by law to take out their required minimum distribution. Mm-hmm <affirmative>, these rules used to be real complex so now they’re simplified a little bit mm-hmm. <affirmative> and one catch is if your spouse is 10 years your junior, then you have a different table. But other individuals, they use a uniform distribution table. Mm-hmm <affirmative>, a lot of individuals have this, they printed off, it’s uh, they seen it a money magazine or um, on [00:16:30] the web. It’s pretty straightforward. So you take your balance the year before on 1231 and this is all your IRA accounts. Mm-hmm. <affirmative>, whether it’s in the bank brokerage stock, brokerage house and you add those up and then you calculate it on the factor, it’s roughly 4% Chris. Okay. And if you have a hundred thousand dollars IRA that says $2,500 has to get out of that ira mm-hmm <affirmative> by the end of that tax year, the following tax year.

Speaker 2:           So, um, 12 31 20 13, [00:17:00] we have until December 31st, 2014 to get that money out. We can take it out January one or we can wait until December 31st. We just have to have it out in that tax year. So you gotta make sure that that gets taken out because if you don’t, the IRS will assist you in helping you get that out <laugh>, they would be more than happy to help you. Right. Right. And if they help you get your required minimum distribution out, they will help you in the means of a 50% [00:17:30] penalty. Wow. So back to our example, you were supposed to take out $2,500, you didn’t take out anything. The IRS is just gonna say out of that withdrawal of $2,500, then you need to send us $1,250, 50% of what you should have taken out. So, um, that’s a definite need to know. Need to put that on a calendar.

Speaker 2:           You can’t guess at it because the penalty is too egregious. Mm-hmm <affirmative>, next thing [00:18:00] the strategy, uh, for IRA owners out here listening is they’re gonna wait until they’re at 70 and a half before they take anything out of their ira. Okay. If that’s your strategy, we have definitely gotta talk mm-hmm <affirmative>. And the reason why I’m saying that is because individuals are not taking advantage of their marginal tax rates while they retire up to the age of 70 and a half. Mm-hmm. <affirmative>. And the reason why I’m saying that Chris is required [00:18:30] minimum distributions cannot be converted into a Roth ira and we gotta remember that the Roth IRA is what we call the magic bucket. Mm-hmm <affirmative> because that account is not subject to required minimum distributions. Okay. So we have that aspect of it. The other aspect is that this Roth account grows tax deferred and the distributions are tax free.

Speaker 2:           Hmm. So when we take [00:19:00] a distribution outta that Roth ira, they are not counted towards our social security calculation on whether any or part of our social security is included in taxable income. Okay. So if your strategy is you’re gonna wait until age 70 and a half to take out your IRA distribution mm-hmm. <affirmative>, you’re probably not implementing an effective tax plan. Okay. So that’s where as a [00:19:30] listener you’re seeing the different hats being put on as a tax attorney, as a certified financial planner and as a cpa, those are all three mm-hmm <affirmative>. So like I say, there’s more letters after my name <laugh> than in my name <laugh>. So when we combine all those, then we’re implementing the investment planning, which takes into account the tax planning mm-hmm. <affirmative>. So therefore the client is more proficient in what they’re [00:20:00] actually doing and they’re getting comprehensive advice. Right. So again, RMDs are required on regular IRAs, they are not required on Roth IRAs.

Speaker 2:           So you can always make a Roth conversion, but you can’t do it on your required minimum distribution amount. So if you wanted to do that and you’re over age 70 and a half, you have to take out your RMD amount and then [00:20:30] you gotta take out some more amount to make that conversion. So now your taxable income is far greater and now more than likely more of your social security is gonna be included in taxable income. Mm-hmm <affirmative>. So that is something you definitely don’t wanna do is wait until age 70 and a half to start the distribution. Right. And we can show those numbers to any of the listeners out here. Chris, next one. Um, if [00:21:00] you have inherited an IRA as the beneficiary on that IRA, you are required to take out a distribution each and every year. So we’ve seen where mom and dad have passed away, dad passed away first Mom put it in her name, mom then passed away and now the son has inherited that ira.

Speaker 2:           That son has a required minimum distribution allotment each and every year. So if they don’t take it out either, [00:21:30] and again it’s based on their life expectancy, the IRS will levy a 50% non distribution penalty on that. Mm-hmm <affirmative>. So you definitely gotta make sure that you’re having that distribution taken out. It needs to be set up like clockwork, not guesswork. So that way you’re not going to impose the 50% penalty on that. And then you say, do I actually have a retirement distribution strategy? Do I take it from my Roth [00:22:00] ira, do I take it from my regular ira? Do I take it from my after tax account? If you don’t have any idea where you’re gonna get the safe and secure retirement income stream that you gotta have, then that’s another reason to give Tina a call to sit down and produce that strategy and understand what the plan’s gonna be going forward to address inflation risk and also longevity risk on the distribution strategy.

Speaker 2:           Mm-hmm. <affirmative>, that way you have [00:22:30] peace of mind to know. So, and if I knew the difference that if I withdrew $3,000 a month, Chris mm-hmm. <affirmative> that I’d run outta money or at least I, I’m projected to run outta money in my mid seventies. Right. But if I reduce that amount to $2,500 a month, the projection shows that I don’t run outta money until my late nineties. You know what I would do? Mm-hmm. <affirmative>, I’d take the 2,500. Yeah. [00:23:00] But a lot of listeners out here don’t know what that impact can do and where that sweet spot is for what they can do in retirement to have a sustainable, secure retirement income stream. Just a little bit of difference there goes a long way with it goes a tremendous way because we’re not talking one year, we’re talking 10, 15, 20 years down the road on what this impact is gonna be.

Speaker 2:           And that’s where planning comes into shape. Not just managing [00:23:30] the investments and allocating the portfolio. This is actual real planning, sitting down and putting the plan in place and being a certified financial planner, a CPA and a tax attorney all combined, we’re looking at that succinctly to help our listeners move forward and have that safe and secure retirement. Mm-hmm. <affirmative>. So that’s one thing. And then as an IRA owner, we discussed the required [00:24:00] minimum distributions we’ve required, required beginning day is age 70 and a half. Mm-hmm. <affirmative>. Now we gotta look at your beneficiary designations. This is combining being a certified financial planner along with being a tax attorney, Chris. So we have the IRA beneficiary and usually the spouse is named as the primary beneficiary, but what happens if that spouse passes away? Mm-hmm. <affirmative>, who is it gonna go to? Well [00:24:30] if the spouse has it on their ira, okay. Mm-hmm. <affirmative> and they roll it over to their individual IRA and that spouse then gets remarried. Who are they gonna name on there?

Speaker 3:           More than likely their new,

Speaker 2:           The new husband or wife or or her new wife. Right. So they then pass away that money then rolls to the new spouse, could be husband number two or wife number two mm-hmm. <affirmative>. And now the kids say, wait a minute, that was dad’s pension. [00:25:00] Mm-hmm. <affirmative> dad’s 401k that mom put in her name and now mom has left it to husband number two, where’s our share? Right. And you say your share is not there

Speaker 3:           <laugh>, it’s

Speaker 2:           Gone. It’s to husband number two. Yeah. And then you come back and you say to husband and wife and we run through this scenario with our listeners that we meet with at the Cunningham Center and we say, do you understand what can [00:25:30] happen? And I’m walk ’em through and they say, well we didn’t expect that that could happen. Mm-hmm. <affirmative>. And I say, that’s fine, it hasn’t happened yet. Right. So let’s put in place an effective beneficiary designation on the ira. Mm-hmm <affirmative>. So that can’t happen. And they say proceed. Yeah.

Speaker 3:           Gotta protect it

Speaker 2:           <laugh>, try to protect it.

Speaker 3:           Exactly.

Speaker 2:           This is scene

Speaker 3:           Todd. Always good information

Speaker 2:           With a professional

Speaker 3:           Edge. Yes. The man of [00:26:00] many hats <laugh> has lots of good information and we have more coming up and uh, speaking of that, have a giveaway.

Speaker 2:           All right, let’s do it. You wanna

Speaker 3:           Do it now?

Speaker 2:           Yep. Let’s do it. Well

Speaker 3:           Let’s give us a book. How about this? The big retirement risk. It’s a really good read. Think you’ll enjoy it. Hardback book really packed with lots of good information. How about a free copy of that? If you’d like one. Just call 8 7 7 6 5 4 97 98 8 7 7 6 5 4 97 98. And Tina will make sure to get that in the mail to you. And

Speaker 2:           Then now you have something [00:26:30] to read on the summer vacation. Mm-hmm.

Speaker 3:           <affirmative>, you can, uh, increase your knowledge. That’s right. Exactly. <laugh>. All right. Stay with us. We’ll have more of the show right after this.

Speaker 1:           As a tax attorney CPA for over 15 years, seeing Todd has implemented over 1000 individual estate plans, he has recently authored an especially helpful guide, how to Unlock the Ultimate Estate Plan. This [00:27:00] guide has helped many individuals to understand the benefits of an estate plan and how to avoid unintended disasters. Scene has made every attempt to write this in plain English to receive this valuable guide how to unlock the Ultimate Estate Plan, call 1 8 7 7 6 5 4 97 98 and request your complimentary copy today or by emailing your request to Do you wanna feel more confident about making the right investment, tax and estate planning decisions today? These [00:27:30] decisions are more complex than ever. Have you thought about working with a professional advisor and not sure who to turn to? Not sure what qualifies one to be an advisor seen. Todd is more than qualified as a tax attorney CPA and certified financial planner seen is with estate management counselors. As estate management counselors operates as an independent fee only investment advisory firm, they’re dedicated to gaining a personal understanding of their client’s objectives and implementing professional counsel and advice to achieve those objectives. So [00:28:00] take a second to talk with Seen Todd, to learn how you can benefit from their multidisciplinary practice where they coordinate their clients legal tax and investment strategies into one comprehensive and integrated plan to enhance and protect their client’s financial security. You can reach a state management counselors and speak with scene Todd by calling 1 8 7 7 6 5 4 97 98. That’s 1 8 7 7 6 5 4 97 98.

Speaker 5:           Round around I get around.

Speaker 3:           [00:28:30] All right. Welcome back to Professional Edge with scene. Todd, I’m Chris East. Thank you so much for joining us today. We appreciate that a whole lot. If you want to get in touch with scene, the number to call 8 7 7 6 5 4 97 98 8 7 7 6 5 4 97 98. Don’t forget to check out the website too. You’ll find a lot of good information right there. EMC All right, scene, let’s get back into the show here.

Speaker 2:           All right. [00:29:00] We’re talking, uh, with IRA owners on things they need to know and here was one stat I came across Chris and it says, uh, women in retirement at age 65 mm-hmm <affirmative> women can expect to live on average an additional 20 years. In addition, many women will live into their nineties. Mm-hmm <affirmative>, this means that women should generally plan for a long retirement that will last at least 20 to 30 years. Wow. Women should also consider the possibility [00:29:30] of spending some of those years alone. Mm-hmm. <affirmative>, according to recent statistics, 42% of older women are widowed. 11 are 11% are divorced and approximately half of all women age 75 and older live alone. So as a woman listener out there, you have definitely gotta address to make sure that a, the ira, the estate plan, the retirement funding analysis is [00:30:00] complete because this is who we’re talking about on the longevity risk that people are going to live so much longer to make sure that this portfolio, IRAs brokerage accounts have a sustainable retirement income stream.

Speaker 2:           Mm-hmm <affirmative> for that safe and secure retirement. And these are the stats that are coming out and that was uh, US Department of Health and Human Services running those stats. Hmm. So back to the IRA owner on things [00:30:30] you need to know, and we were talking about the beneficiary designation on IRA’s, Chris, and it wasn’t necessarily the primary beneficiary, but we showed, or we talked to listeners about where the children of the first marriage can get disinherited, like a blink of an eye. Right. Because a husband leaves it to wife, husband dies, wife takes it, she then leaves it to husband number two, husband number two excludes the kids of the [00:31:00] first marriage. Mm-hmm <affirmative>, blink and I, we see it happen all the time. So the other thing that we look at, Chris, is the contingent beneficiary. Right. And we see this time and time again where husband names wife, wife is primary and they named Billy and Jenny as the contingent Billy and Jenny.

Speaker 2:           But Billy unfortunately has passed away. Mm-hmm <affirmative>. So Billy has two kids, [00:31:30] husband passes away, wife gets it, wife now passes away and she didn’t change any of the beneficiary designations on this. Mm-hmm <affirmative>, guess what? Because Billy’s not alive and that’s all he did was put his two kids’ names on this beneficiary form as contingent. Mm-hmm <affirmative>, Billy’s kids will not receive Billy’s share. Ah, they’ll be disinherited. So you gotta walk through that on [00:32:00] IRA ownership. Are you potentially going to disinherit your grandchildren? And if your beneficiary has spouse first two kids second, I can almost guarantee that if something happens to your one child, you will disinherit their children, meaning your grandchildren. Mm-hmm <affirmative>. So that’s a reason to make the call to Tina (877) 654-9798. [00:32:30] That number again 8 7 7 6 5 4 9 7 9 8 and have your beneficiary properly done. We can add some language to that and that’s where we’re adding the language such as being a tax attorney and a certified financial planner, understanding what needs to be done on this to make sure that it goes to the right people and you don’t disinherit your grandchildren.

Speaker 2:           Mm-hmm. <affirmative>. So proper [00:33:00] beneficiary designation, forget about disinheriting your grandchildren. Right. If one of your beneficiaries, your children mm-hmm. <affirmative> is a special needs child and they’re currently receiving disability payments. Okay. Dad passes away, mom gets the IRA and her designation is to leave it to the two kids equally, right? Mm-hmm <affirmative>. Mm-hmm <affirmative> as soon as mom passes away, you just tainted the disabled [00:33:30] special needs child eligibility requirements for government aid. So now you just screwed that up. Mm-hmm <affirmative>. So we have to a eliminate all those IRA assets from the special needs child and then requalify for all this government entitlement. And as a listener, if your son daughter is receiving these [00:34:00] government entitlements, you know exactly what I’m talking about. When reapplying for all these government entitlements is not an easy process and you gotta remember you’re not going to be here. Right. So who’s going to help them apply for all those eligibility requirements to a get everything back in place after this IRA fund is dispersed and used?

Speaker 2:           So that’s the other thing is if you have that special needs child [00:34:30] and you have them on that IRA as a contingent beneficiary mm-hmm <affirmative>, as soon as they get it, meaning the IRA owner has passed away, then they are disqualified. So there’s a way around that to where we’re not gonna disqualify them from the government entitlement. It’s not illegal, but you gotta put it in place before you pass away. Right. Because once you pass away it’s done. Mm-hmm. <affirmative> and now that can change it. No, you can’t. [00:35:00] So that’s another thing that we gotta look at. So we have a disinheriting the grandchildren for IRA owners. Mm-hmm. <affirmative> now we have a, if the beneficiary has special needs and then the third major category is Chris, how is this IRA gonna come out to the kids when mom and dad are done with it? So let’s say that there’s no remarried soul husband passed away.

Speaker 2:           First it rolls over to mom and mom [00:35:30] lives another five years, she passes away and the two kids are the beneficiaries. Mm-hmm. <affirmative>. Okay. 93 days is what it takes a beneficiary to squander the inheritance. Mm-hmm <affirmative>. So let’s think about this. Mom and dad worked the entire lifetime to accumulate this money in the IRA and Junior is gonna get this IRA now and Junior is gonna strip it up. Yeah. Yeah. He will strip it out. Mm-hmm <affirmative>. So he’s gonna call [00:36:00] the person in charge and he’s gonna say send me a check, but there’s a better strategy mm-hmm. <affirmative> than sending a check and he’ll say send me a check. Right. So now Junior is going to strip out this IRA, hit the highest marginal tax bracket on his individual side. Mm-hmm <affirmative> pay all the taxes and maybe end up with 65 cents on the dollar. Hmm. Cuz he blew it.

Speaker 2:           Yeah. So now he’s gonna spend 65 cents on the dollar [00:36:30] within 93 days date of death, your life work effort. Mm-hmm <affirmative> gone. Just out the door. Just out the door. Yeah. So if you’re concerned about that as a listener, <laugh>, what we do is we say we still wanted to go to junior mm-hmm <affirmative> and his sister in equal chairs. That’s fine. Right. But we’re gonna put this a little break on it to where Junior can’t liquidate the whole entire IRA [00:37:00] account for his share in one fell swoop. Mm-hmm <affirmative>. And we’re going to add a designated beneficiary trust as being the beneficiary on this ira. Right. So now this designated beneficiary trust basically says that the surviving spouse can’t name the new spouse as being the beneficiary. Mm-hmm <affirmative>. So we eliminate that of disinheriting the kids of the first marriage. So [00:37:30] that’s addressed. Right. The second thing that we can do with this designated beneficiary trust is that when mom passes away, dad who’s already been gone for several years mm-hmm. <affirmative>,

Speaker 2:           He is actually controlling where this goes and he says, I want it equally to my two kids. Right. So now that’s gonna go to the two kids, but he can also put a break on and say you have to take out the required minimum distribution [00:38:00] mm-hmm <affirmative>, but anything up and above and over that is subject to X restrictions. Right. It could be you can take up to 25% of your earned income mm-hmm <affirmative>. So if Junior is sitting on the couch not doing anything and he doesn’t have a job mm-hmm <affirmative>, he can’t take any more money out. Yes sir. But if Junior has a job, he’s a productive individual, then he can take an additional distribution. Mm-hmm <affirmative>. So that’s sort of known as like an incentive [00:38:30] trust. Okay. So on this D B T does the end of trust, we then structure it so MOM can’t dis disinherit the kids by leaving it to husband number two. Mm-hmm <affirmative>. And when it goes down to the contingent beneficiaries, the kids, they can’t strip it out and spend it and squander it in 93 days. Right.

Speaker 2:           So that is the essence of what a designated beneficiary trust can do. [00:39:00] And the reason why we use these Chris is because we’re talking about the second largest asset. Mm-hmm <affirmative> in a client’s portfolio, it’s probably the largest financial asset that they have. And you know what they’re planning things with this asset based on a simple sheet of paper which says spouse first kid second. Right. But they don’t have any clue what the dynamics are on that distribution and how the kids will take that [00:39:30] money, strip it out, pay the tax, hit the highest marginal rates, get a check and spend it. Mm-hmm <affirmative> and now you’re 30 years of work to put this money in there. It’s gone. It’s gone 93 days. Mm-hmm. <affirmative> and I see it happen.

Speaker 3:           I mean you want your kids to enjoy it but you also want them to have some money that they can live on and have comfortable life instead of just going out just blowing it on something and just

Speaker 2:           On deep appreciating assets. Exactly.

Speaker 3:           Yes. Mm-hmm.

Speaker 2:           <affirmative>. So definitely if you got an ira, [00:40:00] get a designated beneficiary trust in place for that ira.

Speaker 3:           Mm-hmm <affirmative>, they may get mad at you now, but they will. Thank you. Later on

Speaker 2:           <laugh>. All right. So these are things to know as an IRA owner. Stay

Speaker 3:           Tuned. Yes. We’ll have more have this coming in for you and just a couple of minutes. As always, if you’d like to get in touch with scene, you can do that by calling 8 7 7 6 5 4 97 98 8 7 7 6 5 4 9 7 9 8. Don’t forget you can send an email if you have a question, you can uh, drop us line info I [00:40:30] N F and also check out the website too. You’ll find a lot of good information right there for you to browse around EMC More of the show right after this. Stay with us

Speaker 1:           With today’s financial markets. Are you getting the personal and professional attention you and your money deserve? Clients of a estate management counselors benefit from having one set of professionals advise them on their tax estate planning [00:41:00] and investment advice. We call that the professional edge scene. Todd is a tax attorney, CPA and certified financial planner. With over 15 years experience, he welcomes the opportunity to assist you in preparing for retirement, implement effective tax planning strategies and to help you properly plan your estate. His radio show the professional Edge is aired weekly on Sundays at 9:00 AM If you are interested in meeting with scene call his office at (877) 654-9798. That’s 8 7 7 6 5 4 97 98. [00:41:30] We’ve all thought about it, everyone listening will need one. Not having one can cause untold heartache, family conflict escalating to the point of a lawsuit. One simple thing that avoids all that. An effective estate plan. As a practicing tax attorney seen, Todd with estate management counselors has completed over 1000 estate plans during his 15 years of professional practice. He can help you implement an effective state plan, coordinate your financial accounts and make sure you have named [00:42:00] the proper beneficiaries to maximize your tax savings. Call 8 7 7 6 5 4 97 98 today and let tax attorney sing Todd help you implement an effective estate plan. Call 8 7 7 6 5 4 97 98 today.

Speaker 5:           Get around. I get around. Get around around, get

Speaker 2:           Around.

Speaker 3:           All right. Welcome back to Professional Edge with Saint Todd. I’m Chris East. Thank you so much for uh, taking out some time to join us today for the show. We [00:42:30] no, we appreciate that A whole bunch. Don’t forget to check out the website EMC and as always you can get in touch with uh, scene. Tina will more likely answer the phone if you’re busy because you’re a busy man, you wear so many hats, but they can call 8 7 7 6 5 4 97 98 if they have questions and uh, they can get to uh, in touch with Tina and she can help get that sorted out and get ’em over to you and get everything situated. Right. Right.

Speaker 2:           Yep. And we have that office down here at the Cunningham Center. Mm-hmm <affirmative>. Great location, easy in [00:43:00] free parking. Chris <laugh>.

Speaker 3:           That’s even better. That’s a bonus. Yes. <laugh>.

Speaker 2:           So we meet with individuals down here in Columbus, Phoenix City over at the Cunningham Center. Great facility. If you have not, uh, taken an event over there, but um, we make it convenient for our listeners. Mm-hmm <affirmative>. So jumping back into as an IRA owner, the things that you need to know, we were talking about the RMD required minimum distribution, we were talking about having a designated [00:43:30] beneficiary. Hopefully all listeners out here know that you cannot name your estate or you should not name your estate as being the beneficiary on your ira. Mm-hmm <affirmative> because that collapses the stretchability on that ira. Mm-hmm. <affirmative> to no longer than five years after date of death. So that whole IRA has to be distributed out. Then we said okay, how can we protect from disinheriting our grandchildren on that IRA or even disinheriting [00:44:00] our children on the ira mm-hmm <affirmative> and that’s where we implement a defined benefit trust or a designated beneficiary trust, A D B T mm-hmm. <affirmative>.

Speaker 2:           And it basically says, um, when spouse passes away, it goes to the other spouse, the other spouse can a, use it all, take the required minimum distributions. But if that new spouse comes into play, our surviving spouse can’t name the new spouse as being the primary beneficiary on [00:44:30] the first spouse is passing. Right. Now, if you follow me that while you’re driving <laugh>, you probably ran a red light <laugh>. So it basically says that the surviving spouse can’t leave it to the new spouse. Gotcha. They have to leave it down to the kids of that first marriage, therefore you’re not gonna disinherit them. Mm-hmm <affirmative>, the other application of the designated beneficiary trust is that we can structure it to where if you have a child that is receiving [00:45:00] special needs benefits that they will not disqualify themselves by receiving this IRA when the surviving spouse passes away.

Speaker 2:           That is a significant planning tool that most people don’t see, don’t utilize and um, for some reason don’t implement it. Right. Because they don’t know it exists or they haven’t planned that next what if scenario down the road. Mm-hmm. <affirmative>. So those were some of the things that we were talking about on IRAs, things to [00:45:30] know. And jumping over to another side, Chris, on helping our listeners understand the advantage of having a CPA, certified financial planner and tax attorney all at one focus looking at their situation. Okay. And we met with um, an individual down here at the Cunningham Center and you know, I’m not disclosing names or anything, but as an older gentleman, [00:46:00] 70 years of age mm-hmm. <affirmative> and he had done very well and he came in and put down his investment portfolio and you know, just gave us some raw numbers and I said, how do you think you did last year?

Speaker 2:           And, and he, you know, real proud put his chest out and said, well I got 9% last quarter mm-hmm <affirmative> and I said, really 9% last quarter. And he was thinking that I was gonna congratulate him on the 9%. Right. And [00:46:30] again, you gotta remember he’s 70 years old. Mm-hmm. <affirmative>. Okay, so if he’s getting 9% for the last quarter, he received the market rate of return for the s and p 100 index. Right. Cuz that returned a little bit over nine for the first quarter. Mm-hmm <affirmative>. So you gotta think, okay, if he has a diversified portfolio, then he is got a split of let’s say 60 40, 60% stocks, 40% bonds, right? Mm-hmm [00:47:00] <affirmative> or he should have, well if he’s got the bond portfolio and it’s investment grade corporate bonds, those were flat for the quarter. So 60% of his portfolio, which was in the market had to get greater than market rates of return.

Speaker 2:           Mm-hmm <affirmative> in order for this entire portfolio to get 9%. Okay. So the only way you get better than market rates of return, [00:47:30] Chris is taking more risk. Right. So now he’s got this over risky portfolio. If it’s balanced, 60 investment equities, 40% bonds cuz bonds are flat mm-hmm. <affirmative>, so now he’s got this extreme risk on the 60% for a 70 year old. Hmm. Doesn’t make sense. Mm-hmm. <affirmative> and as a listener out there, if this is you, you gotta reduce that risk. [00:48:00] Remember you’re 70 years old mm-hmm. <affirmative>, you’re done trying to accumulate more, right. More mm-hmm. <affirmative>, well you gotta switch now you’re a conservator of what you have and it’s gotta last 20 plus years mm-hmm. <affirmative> and taking this level of risk in that portfolio when you’re 70 years old is absent minded. Yeah. Now here’s the catch. He has [00:48:30] a broker mm-hmm. <affirmative> and that broker helped him get this 9%.

Speaker 2:           Yeah. Well that broker is exposing him to undue risk. Huh. But that’s not the broker’s responsibility. Right. Because remember stock brokers only have to give suitable recommendations. Mm-hmm <affirmative> not in the best interest of the client recommendations. Gotcha. As a fiduciary, as an ria, registered investment advisor, which [00:49:00] we are one mm-hmm. <affirmative> and I’m glad to be one. So you have this 9% return for the quarter and he thought it was tremendous, which it is, but when you look back at it very objectively mm-hmm. <affirmative> 90% for a 70 year old on his portfolio for the quarter, somebody’s not doing their job. Right. Okay. So we have that issue. Okay, keep that in the back of your mind, Chris. Okay. Then he also [00:49:30] has some property mm-hmm. <affirmative> that he allows people to go hunt on. Okay. Okay. So he owns that in his individual name. Mm-hmm. <affirmative> now meeting with him, he just had his will updated a couple years ago Okay.

Speaker 2:           Working with an attorney and I said, all right, that’s fine. That’s great. Congratulations. You’re not one of our statistics that we talk about mm-hmm. <affirmative>. So now we got the will updated, everything’s fine. [00:50:00] And I said, how long do you own this honey property? Oh, we’ve had it 15 years mm-hmm. <affirmative>. And I said, explain to me what you do. Well I lease out a couple interests to allow people to come hunt on this property mm-hmm. <affirmative>. And I say, okay, that’s fine. And I say, how do you own the property? And he says, this isn’t my individual name. I said, Hmm. Okay. All right. So you got stockbroker over here. Mm-hmm <affirmative> run the money undue risk. Right. You got the lawyer [00:50:30] who just got done undoing the wills mm-hmm.

Speaker 3:           <affirmative>.

Speaker 2:           Now do you think that lawyer talked to the stockbroker?

Speaker 3:           Absolutely not.

Speaker 2:           Probably not. <laugh>. Okay. But here’s the edge that can happen very quickly. Okay. What if you are on the hunting property? I’m on the hunting property. I didn’t know that you had a lease on this hunting property mm-hmm. <affirmative> and I thought you were a deer. Mm-hmm <affirmative>, lo and behold, p bang, you’re dead. Mm-hmm. <affirmative>, oh, [00:51:00] you’re not a deer <laugh>. Now what happens? You remember how, how, how, how was the property titled in his this name, in his individual name, right? Mm-hmm. <affirmative>. So therefore remember that stock portfolio over here that’s uh, aggressively earning 9% for the quarter.

Speaker 3:           So that opens that up to

Speaker 2:           That liability.

Speaker 3:           Ah,

Speaker 2:           So now we have, it doesn’t matter what the rate of return is on that portfolio mm-hmm. <affirmative> because we’re looking [00:51:30] at a wrongful death claim right on the property. Mm-hmm. <affirmative> because he didn’t screen or schedule who was gonna be on the property at certain times. Right. He didn’t say you get from uh, October one till October 31st and the next person gets November 1st to November 31st. Mm-hmm. <affirmative> or November 30th. So he’s negligent. So now you got a wrongful death claim. Mm-hmm. <affirmative>. So he’s exposed all the assets over here in the brokerage.

Speaker 3:           [00:52:00] Hmm.

Speaker 2:           But remember he just got done telling me that the lawyer just updated his estate plan mm-hmm. <affirmative> two years ago and he’s had this property for 15 plus years.

Speaker 3:           So it didn’t put anything in there for the property.

Speaker 2:           Didn’t protect it.

Speaker 3:           Ah.

Speaker 2:           So now let’s say the claim is filed mm-hmm. <affirmative>, what’s the stockbroker gonna say? <laugh>, I’m over here doing stocks, I’m over here doing stocks. [00:52:30] Mm-hmm. <affirmative>, that’s not my responsibility. That’s not my job.

Speaker 3:           Yeah.

Speaker 2:           Accumulation and preservation. Mm-hmm. <affirmative> gotta be a conservator. Gotta gotta forget about picking stocks and saying, how can I protect this for the

Speaker 3:           Client? Right.

Speaker 2:           So stock broker’s gonna say, that’s not my job, right? Mm-hmm. <affirmative> because he knows there’s liability there and he is gonna say, I just run stocks. Mm-hmm. <affirmative>, that’s it. What’s the lawyer gonna say?

Speaker 3:           <laugh>, it’s gonna get confusing now.

Speaker 2:           Well the lawyer’s gonna say, [00:53:00] well I just did your estate plan. Mm-hmm <affirmative>, I planned how these assets were going to go to the people, your kids, your wife and everything else. So lawyers gonna say, I well that wasn’t my job. Yeah.

Speaker 3:           He should have been doing this. It’s finger pointing now, isn’t it?

Speaker 2:           <laugh>. Yeah. And, and then I come in and I say, you know what? I understand stocks, you’re too risky. That’s number one. Mm-hmm. <affirmative> number two, your will. That’s fine. It’s updated. That’s great. But here’s the crux. You have [00:53:30] exposure that you can’t even comprehend. Mm-hmm. <affirmative>, it’s hunting property, accidents happen. Talk to Dick Cheney. Yeah. Right? Mm-hmm. <affirmative>. So it, it was, I I was dumbfounded. He’s got over excessive amount of risk into the portfolio to get 9% for the quarter. Mm-hmm. <affirmative> thought he was doing good. Yeah. The lawyer did the estate plan, but yet you let the gate open [00:54:00] for a multimillion dollar lawsuit. Mm-hmm. <affirmative> that would extract all that 9% gain in the blink of an eye. Yep. And that’s the professional edge on putting tax planning, asset protection, financial planning and tax planning together. Mm-hmm <affirmative>, it’s a unique combination and hopefully the listeners will heed that advantage with the professional edge. Yeah.

Speaker 3:           And the need to call you (877) 654-9798. Well, scene, I enjoyed the show today. [00:54:30] Learned a lot of good information as always.

Speaker 2:           Absolutely.

Speaker 3:           So looking forward to next week and what you got on the agenda

Speaker 2:           For next week

Speaker 3:           Or do you have your notes for you?

Speaker 2:           Uh, let me get to it. They’re all, man, if you could see this desk <laugh>, they’re all over. Uh, for next week we’re gonna talk a little bit more about planning for a safe and secure retirement. All

Speaker 3:           Right, sounds good. Hope you have a wonderful week. And

Speaker 2:           You too, Chris,

Speaker 3:           We will catch up with you next week. Same time

Speaker 1:           [00:55:00] We’ve all thought about it. Everyone listening will need one. Not having one can cause untold heartache, family conflict escalating to the point of a lawsuit. One simple thing that avoids all that an effective estate plan As a practicing tax attorney, seeing Todd with estate management counselors has completed over 1000 estate plans during his 15 years of professional practice. He can help you implement an effective state plan, coordinate your financial accounts, and make sure you have [00:55:30] named the proper beneficiaries to maximize your tax savings. Call 8 7 7 6 5 4 97 98 today and let tax attorney sing Todd help you implement an effective estate plan. Call 8 7 7 6 5 4 97 98. Today with today’s financial markets, are you getting the personal and professional attention you and your money deserve? Clients of estate management counselors benefit from having one set of professionals advise them on their tax, estate planning and investment advice. We call that the professional [00:56:00] edge scene. Todd is a tax attorney, CPA and certified financial planner. With over 15 years experience, he welcomes the opportunity to assist you in preparing for retirement, implement effective tax planning strategies, and to help you properly plan your estate. His radio show the professional Edge is aired weekly on Sundays at 9:00 AM. If you are interested in meeting with scene, call his office at (877) 654-9798. That’s 8 7 7 6 5 4 97 98.


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