TH E
OCTOBER 2022
Blitz
Information on Tax and Estate Planning from the Masonic Charities of the Grand Lodge of Pennsylvania
Masonic Charities then takes 5% of the value of the trust assets each year (which means if the trust grows, the payments to your heirs grow) and either pays your heirs such amount for the remainder of their lives or for a period up to 20 years. You decide which option to use. Most people use the lifetime option for children in their 50s or 60s, since the trust could pay income for 20 years or more, well beyond the 10-year limit of an inherited IRA. For those looking to split the payout from the trust among several heirs, especially grandchildren, cousins, nieces or nephews, the payout period of up to 20 years is popular.
Do you have a TRADITIONAL IRA? (If yes, you really need to consider this planning method!) When I visit individuals across the country or residents at the Masonic Villages, the question I keep getting asked is, “Al, what is your most popular estate planning technique?” My response is pretty straightforward if he or she has a traditional IRA: “You have to consider the Income for Life (or up to a period of 20 years) Trust as part of your planning.” Why? Well, let me explain the basics.
Since 2020, anyone other than a spouse who inherits your IRA upon your passing must withdraw the entire amount within 10 years of your death. They also must take required minimum
distributions during this time. ALL of these withdrawals are fully taxable as ordinary income, which means if your heirs are still working or already have significant income, they could be paying a hefty tax on all of these distributions. Maybe 30% or more! OUCH! But wait; there is a solution to mitigate this problem, and it is our most popular estate planning tool since this law was passed. Instead of giving your IRA to your heirs, you pass the IRA to a trust managed by the Masonic Charities at no cost, with an investment fee of less than 1%. The trust receives your IRA assets tax-free and turns around and invests the funds for your heirs.
Once the last heir passes, if a lifetime trust is chosen or payout period for up to 20 years ends, any remaining funds goes to the Masonic Charities of your choice. In circumstances where the IRA is large enough (usually over $750,000), you can even choose other charities, such as your church, to receive part of the remaining funds.
That’s it! Let’s summarize some of the advantages of this technique: •
Masonic Charities professionally manages your IRA assets for little cost.
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Payouts are usually much longer than 10 years, and over time, can exceed the amount your heirs would get if you left them an inherited IRA.
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The trust assets are protected from creditors and cannot be considered as part of a divorce. The assets grow tax-free until they are distributed to your heirs.
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ou can leave any remaining funds when the trust Y terminates to your favorite Masonic Charities or other charities, if your IRA is large enough.
Best of all, you can change your mind at any time before you die and completely revoke or modify the trust. So, there is no commitment up front. What are you waiting for? Call our office at 1-800-599-6454 or email me at ablitz@masonicvillages.org to get your free Income For Life Trust presentation and a personal illustration.
You have nothing to lose and possibly everything to gain.