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New Flexibilities for Partners, Children, and Others

Colleen Sinclair Prosser, Attorney

SinclairProsser Law, LLC 
 

In many ways, planning for non-traditional families is much more problematic than for traditional families.  The tax system is geared towards traditional families and many things that are simply taken for granted with traditional families can become major issues with non-traditional families. 
 

Usually, non-traditional families get the short end of the stick when it comes to tax planning.  For example, there is no gift or estate tax marital deduction available for non-traditional families, whereas spouses can give or leave each other an unlimited amount without facing tax.  Further, retirement plans such as a 401(k) that are made payable to a non-spouse beneficiary do not qualify for a spousal rollover.   
 

The term “rollover” can be confusing because it is used in two very different situations.  First, after your death, a spouse can “rollover” your IRA or retirement plan assets into his or her own IRA.  Essentially, the retirement assets become as though the spouse had contributed the assets himself or herself.  For example, while other beneficiaries must start taking minimum required distributions shortly after the plan owner’s death, the spouse can wait to take distributions until after reaching age 70 ½ .  Only a spouse can do this type of rollover. 
 

There is another type of rollover, too: a rollover from one plan to another plan.  For example, after termination of your employment, with most plans you can “rollover” your employer retirement account, such as your 401(k), into an IRA.  This is sometimes called a “rollout.” A surviving spouse can do this type of rollover, too.  Beginning January 1, 2007, non-spouse beneficiaries can also rollover retirement assets to an IRA.     
 

While the distinction between different types of retirement plans often seems meaningless, after death it can make a big difference.  As a result, the ability to rollover assets from an employer plan to an IRA can be quite important.  Many employer plans require that all funds must be distributed within a few years of the employee’s death.  This allows the employer’s plan to keep its administration costs lower.  However, this would not allow anyone but a very old beneficiary to stretch out retirement plan distributions for their life expectancy.  Now, thanks to the Pension Protection Act of 2006, beginning January 1, 2007, any beneficiary, not just a spouse, can force the employer’s plan to roll the money to an IRA in the name of the decedent.  From there, the beneficiary can take the distributions over his or her life expectancy. 
 

This new “non-spousal rollover” does not allow a non-spousal beneficiary to roll the assets into his or her own account.  However, it does allow them to move them to an IRA where they can stretch out distributions.  This change helps non-traditional families take advantage of the income tax-deferral benefits of retirement benefits. 
 

Whatever your family’s situation, a qualified estate planning and retirement benefits planning attorney can help you plan for the future and walk you through the process when the time comes. 
 

Colleen Sinclair Prosser is a member of the American Academy of Estate Planning Attorneys and concentrates her practice on estate planning and elder law. She is sensitive to challenges presented by lifestyle and circumstance and addresses each situation with personal attention, wisdom and skill.  For more information and our upcoming seminar schedule call 800-336-0891 or visit www.sinclairprosserlaw.com

Upcoming Seminars in The Maryland, Washington DC, and Virginia areas.
 
 
Estate Planning Seminar
  10:00 AM - 11:30 AM
Double Tree Hotel Annapolis (formerly Radisson Hotel Annapolis)
210 Holiday Court

Description
The presentation establishes the necessary components of an effective estate plan.  Attorney Nicole Livingston does an outstanding job in presenting a case study profiling the life of Bill and Mary Jones.   Several scenarios are used to relay the impact of estate planning issues relating to probate, disability due to incompetence, protection of government benefits for special needs loved ones, second marriages, unmarried couples, minimization of federal estate tax and preserving the family legacy.  Wills, living trusts, powers of attorney and health care directives are all represented in the presentation, as well as long term care and Medicaid planning.  At its conclusion, the audience will have a clear understanding of their estate planning options and be equipped to make the choices needed for themselves and their loved ones.  You won't want to miss this seminar - it's informative and easy-to-understand!

Register for This Seminar

 
Estate Planning Seminar
  10:00 AM - 11:30 AM
La Fontaine Bleu
7514 Ritchie Highway

Description
The presentation establishes the necessary components of an effective estate plan.  Attorney Colleen Prosser does an outstanding job in presenting a case study profiling the life of Bill and Mary Jones.   Several scenarios are used to relay the impact of estate planning issues relating to probate, disability due to incompetence, protection of government benefits for special needs loved ones, second marriages, unmarried couples, minimization of federal estate tax and preserving the family legacy.  Wills, living trusts, powers of attorney and health care directives are all represented in the presentation, as well as long term care and Medicaid planning.  At its conclusion, the audience will have a clear understanding of their estate planning options and be equipped to make the choices needed for themselves and their loved ones.  You won't want to miss this seminar - it's informative and easy-to-understand!

Register for This Seminar

 
Estate Planning Seminar
  07:00 PM - 08:30 PM
CROFTON - Crofton Country Club
1691 Crofton Parkway

Description
The presentation establishes the necessary components of an effective estate plan.  Attorney Colleen Prosser does an outstanding job in presenting a case study profiling the life of Bill and Mary Jones.   Several scenarios are used to relay the impact of estate planning issues relating to probate, disability due to incompetence, protection of government benefits for special needs loved ones, second marriages, unmarried couples, minimization of federal estate tax and preserving the family legacy.  Wills, living trusts, powers of attorney and health care directives are all represented in the presentation, as well as long term care and Medicaid planning.  At its conclusion, the audience will have a clear understanding of their estate planning options and be equipped to make the choices needed for themselves and their loved ones.  You won't want to miss this seminar - it's informative and easy-to-understand!

Register for This Seminar

 
Estate Planning Seminar
  07:00 PM - 08:30 PM
Double Tree Hotel Annapolis (formerly Radisson Hotel Annapolis)
210 Holiday Court

Description
The presentation establishes the necessary components of an effective estate plan.  Attorney Nicole Livingston does an outstanding job in presenting a case study profiling the life of Bill and Mary Jones.   Several scenarios are used to relay the impact of estate planning issues relating to probate, disability due to incompetence, protection of government benefits for special needs loved ones, second marriages, unmarried couples, minimization of federal estate tax and preserving the family legacy.  Wills, living trusts, powers of attorney and health care directives are all represented in the presentation, as well as long term care and Medicaid planning.  At its conclusion, the audience will have a clear understanding of their estate planning options and be equipped to make the choices needed for themselves and their loved ones.  You won't want to miss this seminar - it's informative and easy-to-understand!

Register for This Seminar

 
Estate Planning Seminar
  10:00 AM - 11:30 AM
Hanover - Residence Inn by Marriott
7035 Arundel Mills Circle

Description
The presentation establishes the necessary components of an effective estate plan.  Attorney Colleen Prosser does an outstanding job in presenting a case study profiling the life of Bill and Mary Jones.   Several scenarios are used to relay the impact of estate planning issues relating to probate, disability due to incompetence, protection of government benefits for special needs loved ones, second marriages, unmarried couples, minimization of federal estate tax and preserving the family legacy.  Wills, living trusts, powers of attorney and health care directives are all represented in the presentation, as well as long term care and Medicaid planning.  At its conclusion, the audience will have a clear understanding of their estate planning options and be equipped to make the choices needed for themselves and their loved ones.  You won't want to miss this seminar - it's informative and easy-to-understand!

Register for This Seminar

 
   



 

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Estate Planning Attorneys for Annapolis, MD