Separate Share Rule Considerations in Structuring IRA Trusts

Ensuring Beneficial "Stretch" Treatment for Beneficiaries of IRA See-Through Trusts Through Separate Share Application

A live 90-minute CLE/CPE webinar with interactive Q&A


Tuesday, August 29, 2017 (in 8 days)
1:00pm-2:30pm EDT, 10:00am-11:30am PDT


This CLE/CPE webinar will provide estate planning counsel with a thorough and practical guide to the separate share rule requirements and calculations as they apply to IRA beneficiary trusts. The panel will detail the specific requirements for designating separate shares in trust documents, outline various IRS pronouncements on applying the rule, and offer specific drafting language and structuring tips to ensure that an IRA beneficiary trust conforms with the separate share requirements.

Description

One of the most valuable estate planning tools for both protecting and maximizing the value of IRA assets is the use of a trust as an IRA beneficiary. Properly structured, an IRA beneficiary trust allows extended tax deferral benefits by “stretching out” the payments over the beneficiary’s life expectancy, so long as the trust document follows the “separate share” rules of IRC 663(c).

The separate share rule requires that, for purposes of calculating distributable net income (DNI), any trust that has more than one beneficiary and “substantially separate and independent shares of different beneficiaries in the trust shall be treated as separate trusts.”

In the context of an IRA beneficiary trust, the separate share rules also allows an IRA to factor in the ages of each beneficiary of the IRA in making required minimum distributions (RMDs), thus achieving “stretch” treatment.

However, failure to properly structure the IRA trust can lead to unfavorable consequences. The trust document must properly identify the separate shares per beneficiary, or the trust is required to make the RMDs based on the age of the life expectancy of the oldest beneficiary and will lose the advantage of prolonged tax deferral from stretching out payments.

Tax advisers and estate planners structuring IRA trusts must have a deep and practical understanding of the separate share rules to avoid negative tax consequences. Listen as our experienced panel provides detailed guidance, including sample language, to help you master the intricacies of the separate share rules in drafting IRA beneficiary trusts.

Outline

  1. Structure of IRA beneficiary trusts
  2. Separate share rule terms for DNI calculation
  3. RMD payout terms absent separate share rule application
  4. Structuring trusts to ensure beneficiaries receive stretch treatment under separate share rule
  5. Ensuring beneficiary designations allow for separate share rule treatment

Benefits

The panel will review these and other key issues:

  • Specific structuring rules and beneficiary designations that must be followed to ensure that beneficiaries get “stretch” treatment of RMDs
  • Factors for evaluating beneficiaries of an IRA trust
  • Provisions that must be included in trust language for a trust to qualify for look-through treatment
  • Impact of a charity or non-individual beneficiary on application of the separate share rules
  • Disclaimer provisions to achieve maximum stretch treatment

Learning Objectives

After completing this course, you will be able to:

  • Identify required trust terms and beneficiary designations to ensure an IRA beneficiary trust conforms with the separate share rule
  • Discern the difference in treatment of RMD payments between a trust that receives stretch treatment and one that does not
  • Determine what info and structures are needed in designating beneficiaries in a trust receiving stretch treatment

Faculty

Kristen M. Lynch, Partner
Lubell Rosen, Ft. Lauderdale, Fla.

Ms. Lynch represents clients in matters related to probates, guardianships, estate planning, asset protection, philanthropic planning & charitable giving, and retirement planning. She assists individual clients with self-directed IRAs and provides legal advice to institutional clients that serve as custodians or trustees of IRAs.

Neda Barkhordar, Esq.
Givner & Kaye, Los Angeles

Ms. Barkhordar advises clients on both traditoinal estate planning and complex estate tax planning involving private annuities, QPRTs, SCINs and GRATs. She also counsels clients and their other advisors about the Offshore Voluntary Disclosure Program. She works on inbound planning, multi-national planning, and other problems, including innocent spouse, offer-in-compromise and installment agreements.


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CPE on Live Event

Continuing Professional Education credit processing is available for an additional fee per person. You may register for CPE credit processing at any time before or after the program. To qualify for CPE you may not listen via the telephone.

This program is eligible for 1.5 CPE credits.

  • Field of Study: Taxes.
  • Level of Knowledge: Intermediate.
  • Advance Preparation: None.
  • Teaching Method: Seminar/Lecture.
  • Delivery Method: Group-Internet (via computer).
  • Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of verification codes announced throughout the presentation.
  • Prerequisite: Three years+ business, law or public firm experience at mid-level within the organization, preparing complex trust vehicles for estate planning; supervisory authority over other preparers/accountants. Specific knowledge and understanding of Individual Retirement Accounts within an estate planning structure, IRA beneficiary trusts, and IRS regulations addressing requirements for "see-through" trusts; familiarity with the conduit trusts and accumulation trusts.

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Estate Planning Advisory Board

Gary D. Altman

Principal and Founder

Altman & Assoc.

Brian M. Annino

Partner

Annino Law Firm

Richard S. Franklin

Member

Franklin Karibjanian & Law

J. Leigh Griffith

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Waller Lansden Dortch & Davis

L. Paul Hood, Jr.

Consultant, Speaker and Author

The University of Toledo Foundation

Denise L. Iocco

Partner

Windels Marx Lane & Mittendorf

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Atty

Donna J. Jackson, Attorney at Law

Salvatore J. LaMendola

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Giarmarco Mullins & Horton

Edwin P. Morrow, III, Esq.

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Scott K. Tippett

Atty

The Tippett Law Firm

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Perkins Coie

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