A recent Wall Street Journal article about special needs planning features several important tips from Academy of Special Nee...Read more
Wall Street Journal Column Features ASNP
The November 10 edition of the Wall Street Journal quotes Academy of Special Needs Planners (ASNP) co-founder Diedre Wachbrit and gives readers the Academy's Web address.
The information appears in Ask Encore/Focus on Retirement, a weekly column answering readers' questions about retirement and personal finance. In the Nov. 10 column, a reader asks whether she can leave an individual retirement account to a special needs trust and, if so, how to stretch out the required distributions as long as possible.
The answer to the first question is yes, but it's important to make sure the trust is set up in such a way that the required yearly withdrawals from the IRA can stay in the trust, cautions Wachbrit, who is described as "a Westlake Village, Calif., attorney and principal of the Academy of Special Needs Planners, which provides information to parents at www.specialneedsanswers.com."
Wachbrit says that an accumulation trust inside the special-needs trust avoids the problem of IRA distributions being sent straight to the beneficiary, jeopardizing the income limits for any government assistance that he or she is receiving.
But she notes that a disadvantage is that the trust would have to pay income tax at trust tax rates, which can be steep '“ up to 35 percent for taxable income over $10,450.
To slow down the required annual distributions, Wachbrit says one should make sure that all the beneficiaries in the trust are similar in age or younger than the primary beneficiary.
To read the entire column, "How Special-Needs Trust Can Avoid IRA Pitfalls" by Kelly Greene, click here. (A subscription to the online Journal may be required.)