section 1 - The American College Online Learning Center

(2) If beneficiaries would need to be protected through the use of the trustbeyond reaching the age of majority, the trust is extremely important forasset protection purposes.(3) Generally speaking, the higher the net worth of the client, the greater thelikelihood he or she is the beneficiary or grantor of a trust.b. Types of trusts18. Living trusts(1) Living revocable trusts are used to hold the grantor’s assets to avoidprobate at death.(2) Living irrevocable trusts will generally be complex and must be funded,implemented, and administered carefully.a. Have trusts been funded as planned?b. If irrevocable, have gift tax returns been filed?c. Where advisable, have beneficiary designations been made to the trustee(s)of the trusts?19. Testamentary trustsa. Created under the client’s willb. Can be revised as long as the client has the capacity to rewrite his or her willc. Will be funded by a portion of the client’s probate estate at deathd. Will be administered by its terms following the client’s death20. Beneficiary designation audita. Action plan(1) Make sure that beneficiary designations are correct with respect to:(a) Life insurance policies(b) Qualified retirement plans(c) IRAs—traditional and Roth(d) Nonqualified deferred compensation plans(e) Annuity products(f) Financial accounts made payable at death21. Estate planning for retirement income vehiclesa. Review beneficiary designations for all qualified plans, traditional or Roth IRAs,simplified employee pensions or other types of self-employed accounts.b. Coordinate with estate planning goals.c. Provide copies to other members of the estate planning team.d. Educate the client not to fill out beneficiary designation forms without guidance.22. Tax implications for leaving retirement plan assets to heirsa. Distributions are fully taxable to the beneficiary; the step-up rule is not available.b. If the participant only took required minimum distributions, assets will be availableat death for heirs.c. Minimum distribution requirements after death depend upon the type and ageof the beneficiary.23. Selecting designated beneficiaries of retirement income accountsa. The spouse4.26