#EstatePlanning #Inheritance #Trusts #401k #PropertyTaxes #FinancialAdvice
Hey there, fellow trust beneficiaries! 👋 Have you ever found yourself in a situation where you’ve inherited a 401k that’s specifically earmarked for property taxes and home repairs for a farm that’s in a trust? 🤔 Well, that’s exactly where I find myself at the moment.
My dad set up our family farm in Wisconsin to be managed by a trust for my 3 brothers and me. One brother has full use of the farm, while another is the trustee. It’s definitely an interesting setup, to say the least! 🏡
Now, my dad wants to leave his 401k to the trust for these specific purposes. While it’s a generous amount that could last for years, we want to make sure we transfer the funds in a way that minimizes tax liability. So, here’s the burning question: what are the best options for transferring this 401k money to the trust with the least amount of tax implications? 🤔💸
Possible Solution:
– Consider setting up an Inherited IRA within the trust to minimize taxes
– Work with a financial advisor specializing in trusts to create a tax-efficient plan
– Look into the option of spreading out distributions over time to lower tax brackets
Do you have any insights or experiences to share? Let’s discuss and help each other navigate this complex situation! 💬🤝 #FinancialPlanning #EstateManagement #TaxEfficiency
The trust can be listed as the beneficiary of the 401k and by that authority the trust would inherit that asset.
However, under current rules, you have to withdraw all funds from the 401k within 10 years after inheriting.
So if this is a large 401k, there will be some tax planning to be done on a yearly basis to figure out how to handle that “taxable income”.
Also keep in mind that tax rates are higher for trust than for individuals (in most cases).
I’d advise your dad to talk to another estate attorney just for a second opinion.
A family limited partnership would be more ideal for the farm and house.