1 00:00:00,000 --> 00:00:02,340 INTRO: Hi, I'm Ed Slott and I'm Jeff Levine. 2 00:00:02,460 --> 00:00:06,090 And we're two guys who just love to talk about retirement and taxes. 3 00:00:06,120 --> 00:00:10,050 Look, our mission is simple to educate you the saver so that you can make 4 00:00:10,050 --> 00:00:14,160 better decisions because better decisions on the whole lead to better outcomes. 5 00:00:14,190 --> 00:00:16,500 And here's how we're going to do that each week. 6 00:00:16,590 --> 00:00:21,270 Jeff and I will debate the pros and the cons of a particular retirement strategy 7 00:00:21,270 --> 00:00:25,890 or topic with the goal of helping you keep more of your hard earned money. 8 00:00:26,040 --> 00:00:29,680 Yeah, but we won't know which side of the debate we're taking until we flip a. 9 00:00:30,180 --> 00:00:33,630 Winner of the coin flip gets to pick which side of the debate they want to argue. 10 00:00:33,660 --> 00:00:37,950 And both of us will have to argue in favor of our respective positions, 11 00:00:38,190 --> 00:00:40,500 whether we agree with them or not. 12 00:00:40,500 --> 00:00:43,770 At the end of each debate, there's going to be one clear winner. 13 00:00:43,980 --> 00:00:47,640 You a more informed saver who can hopefully apply the merits of 14 00:00:47,640 --> 00:00:50,790 each side of the debate to your own personal situation, to decide 15 00:00:50,790 --> 00:00:52,740 what's best for you and your family. 16 00:00:52,800 --> 00:00:53,700 So here we go. 17 00:00:53,700 --> 00:00:55,860 Welcome to the great retirement debate. 18 00:01:02,129 --> 00:01:02,699 Jeff Levine: All right. 19 00:01:02,699 --> 00:01:06,300 Welcome back to our latest episode of the retirement debate. 20 00:01:06,304 --> 00:01:06,660 Ed. 21 00:01:06,990 --> 00:01:07,679 Good to be back 22 00:01:07,679 --> 00:01:08,850 Ed Slott: The great retirement debate. 23 00:01:08,850 --> 00:01:09,790 I thought it was 24 00:01:09,820 --> 00:01:10,570 Jeff Levine: What'd I say? 25 00:01:10,610 --> 00:01:11,390 What'd I say? 26 00:01:11,390 --> 00:01:13,650 Ed Slott: You just said it was a retirement debate. 27 00:01:13,650 --> 00:01:14,690 No, it's a great one. 28 00:01:14,789 --> 00:01:15,509 Jeff Levine: That's all right. 29 00:01:16,080 --> 00:01:17,820 Maybe this week is gonna be the excellent one. 30 00:01:17,820 --> 00:01:19,830 That's a, you know, it's, it's probably a good idea. 31 00:01:19,830 --> 00:01:22,380 We're we're still relatively new to this podcasting thing, ed, 32 00:01:22,380 --> 00:01:25,949 but probably a good idea to know the name of your own show, right? 33 00:01:25,955 --> 00:01:27,960 That's a that's that's usually a good start. 34 00:01:27,964 --> 00:01:28,320 All right. 35 00:01:28,324 --> 00:01:31,500 Well, uh, ed, what's on, what's on the docket for today. 36 00:01:31,500 --> 00:01:31,979 What do we got? 37 00:01:32,654 --> 00:01:36,195 Ed Slott: Well, some questions are surround whether a person should 38 00:01:36,195 --> 00:01:41,174 name a trust as their IRA or planned beneficiary and as with everything 39 00:01:41,174 --> 00:01:43,514 there's reasons for or against. 40 00:01:44,264 --> 00:01:44,594 Jeff Levine: All right. 41 00:01:44,594 --> 00:01:44,924 All right. 42 00:01:44,924 --> 00:01:45,644 That's a good one. 43 00:01:45,704 --> 00:01:46,244 That's a good one. 44 00:01:46,249 --> 00:01:47,744 I definitely get that question a lot. 45 00:01:47,744 --> 00:01:48,524 I'm sure you do. 46 00:01:48,734 --> 00:01:49,214 Ed Slott: Oh yeah. 47 00:01:49,274 --> 00:01:50,144 Jeff Levine: Quite a bit as well. 48 00:01:50,144 --> 00:01:53,955 Alright, so your topic this week, so I get to flip the coin alright. 49 00:01:54,690 --> 00:01:58,560 I'm gonna take tails and, uh, let's see what it comes up as. 50 00:01:58,560 --> 00:01:59,550 We're flipping the coin here. 51 00:01:59,550 --> 00:02:01,740 We're actually gonna use Google coin flip for this. 52 00:02:01,980 --> 00:02:03,690 Ed Slott: I didn't even know there was such a thing. 53 00:02:03,750 --> 00:02:04,640 Can we trust it? 54 00:02:05,090 --> 00:02:06,750 Cause we're talking about trust. 55 00:02:06,839 --> 00:02:07,199 You get it? 56 00:02:07,259 --> 00:02:09,570 Jeff Levine: Ah, you got they very good. 57 00:02:09,570 --> 00:02:09,960 Oh boy. 58 00:02:10,259 --> 00:02:10,530 All right. 59 00:02:10,530 --> 00:02:12,570 This is gonna be a lot of bad jokes between the two of us. 60 00:02:12,570 --> 00:02:13,500 I can see that already. 61 00:02:13,500 --> 00:02:16,950 We're gonna get groans, audible groans coming through the speakers. 62 00:02:17,220 --> 00:02:17,609 All right. 63 00:02:17,700 --> 00:02:18,990 So good news for you, ed. 64 00:02:19,049 --> 00:02:20,690 Uh, heads is the answer. 65 00:02:20,690 --> 00:02:21,250 So you get to pick. 66 00:02:21,655 --> 00:02:22,465 Do you wanna argue this? 67 00:02:22,465 --> 00:02:24,114 Ed Slott: Don't people get to see the Google thing? 68 00:02:24,114 --> 00:02:25,135 Like how do we know? 69 00:02:25,135 --> 00:02:26,335 You're just watching that. 70 00:02:26,635 --> 00:02:27,805 Jeff Levine: Well, I told you you won. 71 00:02:27,805 --> 00:02:27,984 All right. 72 00:02:27,984 --> 00:02:28,285 Fine. 73 00:02:28,285 --> 00:02:28,765 I won. 74 00:02:28,795 --> 00:02:29,275 There you go. 75 00:02:29,275 --> 00:02:29,545 Ed Slott: All right. 76 00:02:30,174 --> 00:02:33,385 no, I thought we would see the whole coin turning thing and everything. 77 00:02:33,385 --> 00:02:33,595 Jeff Levine: All right. 78 00:02:33,595 --> 00:02:34,795 So, well, no, one's gonna see stuff, ed. 79 00:02:34,795 --> 00:02:36,025 Remember, this is a podcast. 80 00:02:36,084 --> 00:02:36,635 Ed Slott: Oh, right, right. 81 00:02:36,635 --> 00:02:36,915 It's. 82 00:02:37,019 --> 00:02:37,559 Podcast. 83 00:02:37,559 --> 00:02:37,769 Right. 84 00:02:37,769 --> 00:02:38,369 I can think. 85 00:02:38,369 --> 00:02:38,609 Yeah. 86 00:02:38,640 --> 00:02:39,659 Cuz we're on video now. 87 00:02:39,929 --> 00:02:40,290 All right. 88 00:02:41,339 --> 00:02:42,540 all right, so you, it should 89 00:02:42,540 --> 00:02:42,779 Jeff Levine: hold on. 90 00:02:42,779 --> 00:02:44,519 Wait, I wanna just make a note to our producer. 91 00:02:44,519 --> 00:02:44,790 Ed. 92 00:02:44,790 --> 00:02:45,869 Don't cut this part. 93 00:02:45,899 --> 00:02:47,070 Please leave this in. 94 00:02:47,609 --> 00:02:47,850 Ed Slott: All right. 95 00:02:47,850 --> 00:02:49,829 Wait, then you gotta have a noise. 96 00:02:49,834 --> 00:02:50,130 All right. 97 00:02:50,130 --> 00:02:51,209 So I'm gonna make a noise. 98 00:02:51,680 --> 00:02:51,980 Jeff Levine: All right. 99 00:02:51,980 --> 00:02:53,120 There's the coin flip noise. 100 00:02:53,120 --> 00:02:53,540 Very good. 101 00:02:53,540 --> 00:02:56,480 I don't know if that came through on audio, but ed, you win. 102 00:02:56,480 --> 00:02:56,810 Great. 103 00:02:56,810 --> 00:02:59,210 You get to argue which side you want, which, uh, which, 104 00:02:59,210 --> 00:03:00,230 which one you going with? 105 00:03:00,320 --> 00:03:02,180 Ed Slott: I would say not to name a trust. 106 00:03:02,180 --> 00:03:03,560 I would go on that side. 107 00:03:03,560 --> 00:03:05,510 Although there are arguments on both sides. 108 00:03:05,510 --> 00:03:06,650 Jeff Levine: Well, I'm gonna do that part, ed. 109 00:03:06,650 --> 00:03:07,100 Hold on. 110 00:03:08,480 --> 00:03:09,680 I'm gonna do that part. 111 00:03:10,130 --> 00:03:10,550 All right. 112 00:03:10,580 --> 00:03:13,860 So you're gonna argue in favor of not using a trust. 113 00:03:14,900 --> 00:03:15,250 Yes? 114 00:03:15,630 --> 00:03:18,230 Ed Slott: I would argue not in favor of a trust. 115 00:03:18,230 --> 00:03:20,160 You said in favor of not using a trust. 116 00:03:20,230 --> 00:03:20,560 Right? 117 00:03:21,420 --> 00:03:23,270 I would argue against. 118 00:03:23,390 --> 00:03:24,260 Jeff Levine: Okay, perfect. 119 00:03:24,260 --> 00:03:29,135 So I'm gonna argue, I'm gonna argue pro I'm gonna say you should use a trust 120 00:03:29,135 --> 00:03:33,785 in most instances to leave your IRA or other retirement vehicle to a trust. 121 00:03:33,785 --> 00:03:34,025 All right. 122 00:03:34,025 --> 00:03:35,435 You wanna, you wanna, it's your topic. 123 00:03:35,440 --> 00:03:36,095 You go first. 124 00:03:36,095 --> 00:03:36,755 Let kick us off. 125 00:03:36,755 --> 00:03:40,115 What, why, why, what what's what's what's your argument against trust? 126 00:03:40,115 --> 00:03:40,295 Ed? 127 00:03:40,295 --> 00:03:40,685 Why? 128 00:03:40,715 --> 00:03:41,075 Why? 129 00:03:41,075 --> 00:03:41,615 I mean trust? 130 00:03:41,615 --> 00:03:45,335 Ed Slott: Well, there are reasons for it, but the secure act made it a lot 131 00:03:45,335 --> 00:03:50,165 less valuable before the secure act people had stretch IRAs, they could do 132 00:03:50,165 --> 00:03:53,915 it through, what's known as a conduit trust where you could get both the 133 00:03:54,185 --> 00:03:58,620 protection of keeping the funds in the trust with just small distributions 134 00:03:58,620 --> 00:04:01,320 going out to the trust beneficiaries. 135 00:04:01,590 --> 00:04:03,320 That's not the case anymore. 136 00:04:04,410 --> 00:04:06,060 In almost all the cases. 137 00:04:06,065 --> 00:04:07,590 Non-spouse beneficiaries. 138 00:04:07,590 --> 00:04:10,350 There are exceptions of course, with everything, but most 139 00:04:10,350 --> 00:04:14,130 non-spouse beneficiaries will have to empty that account. 140 00:04:14,130 --> 00:04:17,160 Or if it's left to the trust, will have to be paid into the trust 141 00:04:17,160 --> 00:04:21,270 by the end of the 10th year after death under these new 10 year rules. 142 00:04:21,570 --> 00:04:22,380 And if you want. 143 00:04:22,615 --> 00:04:26,905 Credit or, or the credit or a trust protection or protection for the, uh, 144 00:04:26,935 --> 00:04:31,555 beneficiaries or from the beneficiaries, it would have to remain in the trust 145 00:04:31,555 --> 00:04:36,475 and get taxed in the trust at high trust tax rates, trust tax rates, not 146 00:04:36,475 --> 00:04:41,305 that they're high, but the brackets are very compressed after about 13,000. 147 00:04:41,310 --> 00:04:42,385 You're at the top, right? 148 00:04:42,385 --> 00:04:45,805 Where an individual wouldn't hit that rate till over 500,000. 149 00:04:46,135 --> 00:04:46,705 So. 150 00:04:46,815 --> 00:04:49,275 What's the cost of protection. 151 00:04:49,275 --> 00:04:50,715 It may be prohibitive. 152 00:04:50,955 --> 00:04:54,915 So I don't think most people need that kind of, uh, heavy duty 153 00:04:54,920 --> 00:04:59,435 lifting of a trust, uh, given the cost and the complexities. 154 00:05:01,225 --> 00:05:05,295 Jeff Levine: All fair points, but I, I would ask you this, what's the 155 00:05:05,295 --> 00:05:08,055 one thing we know about the future. 156 00:05:09,875 --> 00:05:10,865 Ed Slott: That we don't know 157 00:05:10,935 --> 00:05:12,265 Jeff Levine: That's exactly right. 158 00:05:12,395 --> 00:05:13,985 We don't know what the future is. 159 00:05:13,985 --> 00:05:17,375 And so if we don't know what the future is, I mean, what if there's a, 160 00:05:17,495 --> 00:05:22,655 a car accident or what if there's a, a, a divorce or what if there are any 161 00:05:22,655 --> 00:05:24,725 number of issues that we can't foresee? 162 00:05:24,730 --> 00:05:27,065 If there's one thing we know about the future, it's, it's 163 00:05:27,065 --> 00:05:29,195 unknown and you are right. 164 00:05:29,195 --> 00:05:30,365 Like things happen all the time. 165 00:05:30,365 --> 00:05:33,065 You talked about law changes, but I mean, I, I think. 166 00:05:33,975 --> 00:05:38,265 A decade ago, ed, think about all the things that have already happened since 167 00:05:38,265 --> 00:05:42,765 then, that you could have never predicted would be the case at this point in time. 168 00:05:42,765 --> 00:05:42,975 Right? 169 00:05:42,975 --> 00:05:46,965 I mean, who could have seen all the things happening over the last, I mean, in my 170 00:05:46,970 --> 00:05:49,545 own lifetime, over the last decade I got. 171 00:05:49,605 --> 00:05:50,115 Married. 172 00:05:50,115 --> 00:05:51,045 I had three kids. 173 00:05:51,045 --> 00:05:52,815 I moved halfway across the country. 174 00:05:52,815 --> 00:05:54,915 I mean, so many things happen. 175 00:05:55,185 --> 00:06:00,195 And if we can't foresee that, well, then the only reasonable approach 176 00:06:00,255 --> 00:06:04,935 might be to use a trust to make sure that no matter what happens in the 177 00:06:04,935 --> 00:06:10,065 future, that I have protection, you talked about taxes, but if I lose $1 178 00:06:10,065 --> 00:06:13,315 of my IRA to a creditor, I have $0. 179 00:06:13,665 --> 00:06:17,685 If I lose 40 cents of my IRA to a trust tax rate. 180 00:06:17,685 --> 00:06:22,415 Like, no, I don't want that, but at least I have 60 cents left. 181 00:06:23,495 --> 00:06:23,795 Ed Slott: Yeah. 182 00:06:23,825 --> 00:06:27,455 The only reason you would use a trust, uh, what I'm saying, I, 183 00:06:27,515 --> 00:06:29,705 it's not so much in the past. 184 00:06:29,705 --> 00:06:33,185 People used it for both tax reasons and non-tax reasons. 185 00:06:33,395 --> 00:06:37,145 I don't think there's a tax reason anymore because you don't get the long deferral. 186 00:06:37,150 --> 00:06:39,485 You don't get the stretch IRA for the most part. 187 00:06:39,725 --> 00:06:45,155 The only time I would use a trust, if you, it would be for personal non-tax reasons. 188 00:06:45,155 --> 00:06:47,375 Like some of the things you said, you have a minor. 189 00:06:48,455 --> 00:06:50,345 An unsophisticated beneficiary. 190 00:06:50,345 --> 00:06:51,935 Some of those things are divorced. 191 00:06:51,935 --> 00:06:53,555 Credit of bankruptcy, lawsuits. 192 00:06:53,885 --> 00:06:58,985 Every client I ever had, especially with young kids has told me. 193 00:06:59,435 --> 00:07:01,895 You know what I don't mind giving to my kids. 194 00:07:02,465 --> 00:07:05,645 The one, the thing that bothers me is the ones they marry. 195 00:07:06,065 --> 00:07:10,655 That's what they always say because they built up 3 million in an IRA and 196 00:07:10,655 --> 00:07:13,625 they say, but I don't want it to end up with somebody I don't even know now. 197 00:07:13,625 --> 00:07:17,435 So that may be a reason to name a trust, but I think it's overly 198 00:07:17,440 --> 00:07:19,355 cumbersome for most people. 199 00:07:19,465 --> 00:07:21,065 And you can use better vehicles. 200 00:07:21,065 --> 00:07:24,935 For example, if somebody said, I'm not sure if my kid's gonna be on drugs. 201 00:07:25,375 --> 00:07:30,295 Uh, problems or be, uh, full prey to people, uh, taking advantage 202 00:07:30,295 --> 00:07:31,795 of them with money issues. 203 00:07:32,185 --> 00:07:35,245 Then I would say if that money is earmarked for your children 204 00:07:35,245 --> 00:07:38,845 or grandchildren, maybe take it down at today's low rates and put 205 00:07:38,845 --> 00:07:42,265 it in a life insurance policy and leave that life insurance to the 206 00:07:42,270 --> 00:07:44,335 trust we have total flexibility. 207 00:07:44,575 --> 00:07:49,585 You get the post death control, you get the protection and low tax rates. 208 00:07:49,845 --> 00:07:51,345 Jeff Levine: Yeah, but what if it's not earmarked? 209 00:07:51,345 --> 00:07:55,695 What if I I'm one of the, the majority of Americans out there who say, you 210 00:07:55,700 --> 00:07:58,695 know what, I've gotta worry about my retirement first and if my kids 211 00:07:58,700 --> 00:08:01,185 get anything left, that's fantastic. 212 00:08:01,305 --> 00:08:04,935 Well, I can't spend all that money on life insurance today and go broke so 213 00:08:04,935 --> 00:08:06,585 I have no money left in my lifetime. 214 00:08:06,615 --> 00:08:09,405 I mean, that's a great problem to have don't get me wrong, where I'm 215 00:08:09,405 --> 00:08:13,665 trying to, to leave a, a giant legacy to my kids and, and God willing. 216 00:08:14,360 --> 00:08:18,050 Everyone of everyone listening today has that particular problem. 217 00:08:18,350 --> 00:08:21,620 But as we know, the, the majority issue today is I don't wanna run out 218 00:08:21,620 --> 00:08:23,180 of money before I run out of life. 219 00:08:23,210 --> 00:08:26,120 And if I spend all my money on life insurance, I'm gonna run out 220 00:08:26,120 --> 00:08:29,300 of money before I run out of life with a lot greater frequency. 221 00:08:29,600 --> 00:08:33,410 So I think we've gotta look at a, a situation where. 222 00:08:33,730 --> 00:08:38,559 You have a, a vehicle that if you end up with money and look, 223 00:08:38,559 --> 00:08:39,879 hopefully that's the case. 224 00:08:40,329 --> 00:08:43,510 If you do there's protection, but if not, you are able to spend 225 00:08:43,510 --> 00:08:45,220 those dollars freely in retirement. 226 00:08:45,369 --> 00:08:49,450 I mean, whether it's long term care needs or, I mean, we just, again, the future 227 00:08:49,450 --> 00:08:53,410 is unknown and putting those dollars into life insurance means they're probably a 228 00:08:53,410 --> 00:08:55,389 lot less likely to be used today for you. 229 00:08:56,170 --> 00:08:57,490 Ed Slott: Well, it could be used today. 230 00:08:57,490 --> 00:09:00,760 For example, life insurance could have long term care riders where you 231 00:09:00,760 --> 00:09:03,069 can pull out the cash value tax free. 232 00:09:03,370 --> 00:09:07,060 But if you're really worried about that, then you don't have as big an issue. 233 00:09:07,240 --> 00:09:11,560 I think the trust would only be for very large IRAs where more of that money. 234 00:09:11,740 --> 00:09:16,120 Will be passed to the next generation and won't be consumed during your lifetime. 235 00:09:16,360 --> 00:09:20,710 I would even put a dollar amount on it, but everybody's situation is different. 236 00:09:20,950 --> 00:09:24,850 I would say if you don't have a million dollars in an IRA, you probably, you 237 00:09:24,850 --> 00:09:29,080 know, uh, I would only consider a trust to say a million or more in an IRA. 238 00:09:29,485 --> 00:09:31,435 And every situation is different. 239 00:09:31,435 --> 00:09:33,325 Some people might say, that's not enough. 240 00:09:33,325 --> 00:09:34,765 I may need the whole million. 241 00:09:35,035 --> 00:09:39,085 So every situation is different and I agree you have to take care of yourself 242 00:09:39,085 --> 00:09:44,155 first, but if you're really worried about post death control, uh, you may want 243 00:09:44,155 --> 00:09:48,295 to lock some of it up in a trust, but I think there's better vehicles, IRAs 244 00:09:48,525 --> 00:09:53,349 were always lousy assets to leave to our trust with all the complexities and the 245 00:09:53,355 --> 00:09:58,150 hurdles and the obstacles and the tax rules and the RMDs and now the new IRS 246 00:09:58,150 --> 00:10:00,310 rules, making it even more complicated. 247 00:10:00,520 --> 00:10:02,800 Most of the trusts are not even done correctly. 248 00:10:02,800 --> 00:10:07,180 The average attorney uses these garden variety, boiler plate trusts, and they 249 00:10:07,180 --> 00:10:08,859 cause more problems and they're worth. 250 00:10:08,920 --> 00:10:13,180 And generally what I find is when people do have trust, even if they're done 251 00:10:13,180 --> 00:10:16,839 perfectly after say the husband dies, the wife says, well, I don't want that. 252 00:10:16,839 --> 00:10:19,720 I wanna just do a spousal rollover and get to my money. 253 00:10:20,105 --> 00:10:24,125 So I, I think it's a personal decision, like any big financial decision, but 254 00:10:24,125 --> 00:10:29,045 I think it's overly complex and taxing to leave an IRA to a trust today. 255 00:10:29,745 --> 00:10:31,745 Jeff Levine: I, I caught that by the way, overly complex. 256 00:10:31,775 --> 00:10:32,615 And, and what Ed? 257 00:10:32,885 --> 00:10:33,515 Ed Slott: Taxing 258 00:10:33,545 --> 00:10:34,415 Jeff Levine: Ah, yes. 259 00:10:34,415 --> 00:10:36,665 That's the second dad joke for today. 260 00:10:36,685 --> 00:10:36,985 All right. 261 00:10:37,329 --> 00:10:40,869 You're on fire with those look, I, I think you make great points all around, 262 00:10:40,869 --> 00:10:46,089 but, but if I'm John or Mary Smith and I've worked my entire life and, and, and 263 00:10:46,089 --> 00:10:49,900 scrape by, and, and I've accumulated, let's say it's 500,000, as you said, I 264 00:10:49,900 --> 00:10:51,460 put, put a million dollar number on it. 265 00:10:51,460 --> 00:10:54,430 I understand that, you know, there are some cost and complexities 266 00:10:54,430 --> 00:10:55,629 that come along with trust. 267 00:10:55,629 --> 00:11:00,700 But if I have spent my entire life working to build up this half a million dollar 268 00:11:00,700 --> 00:11:04,940 retirement account, that's everything to me, it, it represents my whole lifes work 269 00:11:05,170 --> 00:11:09,790 and the last thing I want is if something happens to me, for my kids to squander 270 00:11:09,790 --> 00:11:14,290 it or for a lawsuit to occur because of maybe something outside of their control. 271 00:11:14,290 --> 00:11:17,899 I mean, we live in a litigious society today, uh, where you can't forsee... 272 00:11:17,919 --> 00:11:18,530 Ed Slott: Really?! 273 00:11:19,000 --> 00:11:20,560 I never saw a sign. 274 00:11:20,560 --> 00:11:23,830 Uh, you know, I travel around the country and I never see any signs 275 00:11:23,830 --> 00:11:25,920 for attorneys looking for lawsuits. 276 00:11:26,265 --> 00:11:29,705 Jeff Levine: You're actually going to be sued now for, for, for liable on that. 277 00:11:29,705 --> 00:11:31,235 That's an untrue statement, ed. 278 00:11:31,240 --> 00:11:31,865 And we're going to, 279 00:11:31,865 --> 00:11:34,055 Ed Slott: I don't know if you notice this, you travel around too. 280 00:11:34,055 --> 00:11:37,175 Every city, the giant signs, personal injury. 281 00:11:37,175 --> 00:11:38,104 I get your money. 282 00:11:38,495 --> 00:11:39,005 Jeff Levine: Yes. 283 00:11:39,035 --> 00:11:39,155 Yeah. 284 00:11:39,155 --> 00:11:40,685 Well every yes, everywhere. 285 00:11:40,689 --> 00:11:40,985 Yeah. 286 00:11:40,985 --> 00:11:45,114 It's uh, Yeah, that, um, well we live in a litigious society. 287 00:11:45,114 --> 00:11:45,314 All right. 288 00:11:45,335 --> 00:11:46,625 So we, we agree on something. 289 00:11:46,630 --> 00:11:47,765 We can agree on that today. 290 00:11:47,945 --> 00:11:48,755 So we agree on that. 291 00:11:48,755 --> 00:11:51,355 Ed Slott: It all comes down to how much you think you need today, 292 00:11:51,475 --> 00:11:54,775 versus how much you're going to leave over for the next generation. 293 00:11:54,985 --> 00:11:58,735 If you think a big chunk of it is going to be left over and you won't need it, 294 00:11:58,885 --> 00:12:00,535 I still don't think you need a trust. 295 00:12:00,535 --> 00:12:03,415 You're probably better off with the life insurance solution. 296 00:12:03,565 --> 00:12:06,925 It's the most flexible asset to leave to a trust cuz you don't have 297 00:12:06,925 --> 00:12:09,295 all these IRA trust complications. 298 00:12:09,345 --> 00:12:10,575 Plus no tax. 299 00:12:10,905 --> 00:12:15,555 Jeff Levine: Well, I guess, I guess in some sense you win then 300 00:12:15,555 --> 00:12:17,205 because you don't have an IRA. 301 00:12:17,415 --> 00:12:20,895 And so if you don't have an IRA, you can't leave it to a trust, but I don't know. 302 00:12:20,895 --> 00:12:22,575 That's really in the spirit of the rule, ed. 303 00:12:22,575 --> 00:12:25,305 I mean, you're, you're saying like, let's just get rid of the thing altogether. 304 00:12:25,305 --> 00:12:26,175 I mean, what, what, 305 00:12:26,175 --> 00:12:30,195 Ed Slott: No, I'm saying if, if you wanna leave your IRA to a trust because you want 306 00:12:30,195 --> 00:12:35,105 the protection, you can get the protection using other vehicles besides the IRA. 307 00:12:36,189 --> 00:12:36,729 Jeff Levine: All right. 308 00:12:36,790 --> 00:12:37,240 All right. 309 00:12:37,300 --> 00:12:38,800 I'll I'll allow it. 310 00:12:39,490 --> 00:12:39,910 all right. 311 00:12:40,020 --> 00:12:40,839 I'll allow the argument. 312 00:12:40,990 --> 00:12:41,939 Where's my, where's my gavel? 313 00:12:41,939 --> 00:12:42,670 I gotta get my gavel out. 314 00:12:43,930 --> 00:12:48,880 At the end of the day, I, I just think that the biggest issue is, uh, we, we 315 00:12:48,880 --> 00:12:54,810 have so many unknowns going forward and because of that, You can have a, 316 00:12:54,810 --> 00:12:59,340 and you talk about trust tax rates, but what if I give my trustee the authority? 317 00:12:59,340 --> 00:12:59,640 Right? 318 00:12:59,640 --> 00:13:02,130 Like trust tax rates are only an issue. 319 00:13:02,160 --> 00:13:02,400 Ed. 320 00:13:02,400 --> 00:13:07,020 If I, as you know, if I hold the assets within the trust at the end of 321 00:13:07,020 --> 00:13:08,220 the year, that they're distributed. 322 00:13:08,220 --> 00:13:08,490 Ed Slott: Right. 323 00:13:08,550 --> 00:13:10,500 But that's exactly what you're going to do. 324 00:13:10,505 --> 00:13:13,439 If you wanna protect it from those kids blowing the money. 325 00:13:13,930 --> 00:13:15,580 Jeff Levine: Yeah, but what if I, well, but at least I have 326 00:13:15,580 --> 00:13:16,750 choice at that point, right? 327 00:13:16,750 --> 00:13:17,620 You talk about 10 years. 328 00:13:17,830 --> 00:13:18,640 Ed Slott: No, they'll be dead. 329 00:13:18,640 --> 00:13:20,410 So the trustee will have a choice. 330 00:13:20,440 --> 00:13:22,930 Jeff Levine: That's a, well, yes, that's a good point, but all right. 331 00:13:22,930 --> 00:13:26,560 So the trustee will at least have the choice 10 years from again. 332 00:13:26,560 --> 00:13:30,160 I told you all the things that happened in my life 10 years from now, uh, that 333 00:13:30,165 --> 00:13:34,650 trustee could make the decision as to whether or not they wanna keep those 334 00:13:34,650 --> 00:13:37,010 assets in the trust or pass them out. 335 00:13:37,310 --> 00:13:41,660 And at least at that point I would, I would have 10 more years of visibility 336 00:13:41,660 --> 00:13:44,420 into, I mean, if I could predict what would happen in 10 years from now, it, 337 00:13:44,719 --> 00:13:47,380 uh, I gotta tell you, I like you, but I wouldn't be doing this podcast with you. 338 00:13:48,469 --> 00:13:49,550 Ed Slott: You don't know that for sure. 339 00:13:49,729 --> 00:13:52,699 Maybe something else you'd be beaming it to another planet or something. 340 00:13:52,699 --> 00:13:53,180 Jeff Levine: That's right. 341 00:13:53,180 --> 00:13:53,510 Yes. 342 00:13:53,510 --> 00:13:56,510 Ed Slott: But going back to the trustee thing, there's another reason I don't 343 00:13:56,515 --> 00:13:59,060 like trusts who will be the trustee. 344 00:13:59,239 --> 00:14:01,609 Most people just arbitrarily name. 345 00:14:02,065 --> 00:14:06,385 Family member as trustee not realizing they have personal liability. 346 00:14:06,565 --> 00:14:10,405 They have to know all of these rules to paying IRAs to a trust. 347 00:14:10,615 --> 00:14:14,755 Most professionals don't know that, and most trustees are going 348 00:14:14,755 --> 00:14:16,795 to be unprepared for the task. 349 00:14:17,980 --> 00:14:19,960 Jeff Levine: Well, that's true, but I would just argue, we need to 350 00:14:19,960 --> 00:14:22,780 do our research and find the right sort of professional to work with. 351 00:14:22,780 --> 00:14:25,750 And, and perhaps that that's where we have to leave it for today. 352 00:14:25,990 --> 00:14:28,360 So, so help me, help me summarize, right. 353 00:14:28,360 --> 00:14:32,020 If, if, if I'm listening here and I'm going through this debate myself, and 354 00:14:32,020 --> 00:14:35,920 I'm trying to figure out whether I should be using a trust or not, what are some 355 00:14:35,925 --> 00:14:38,920 of the key things on both sides of the issue that I need to to think about? 356 00:14:38,920 --> 00:14:40,030 Ed Slott: Well, first, if you are going. 357 00:14:40,265 --> 00:14:43,085 Feel that you're going to consume most of your IRA. 358 00:14:43,085 --> 00:14:48,485 And I just put an arbitrary number on a million or less, probably not that, not 359 00:14:48,485 --> 00:14:52,775 that much need for a trust cause between RMDs and your spending, most of that 360 00:14:52,780 --> 00:14:54,755 will be consumed during your lifetime. 361 00:14:54,755 --> 00:14:59,855 The big issue is how much of your IRA or plan 401k you're going to 362 00:14:59,855 --> 00:15:02,045 be leaving to the next generation. 363 00:15:02,255 --> 00:15:03,875 Those are the funds you're worried about. 364 00:15:03,875 --> 00:15:07,940 If it's going to be a large share, you may wanna consider a trust, or 365 00:15:08,020 --> 00:15:12,064 better vehicles like life insurance, pulling that IRA down at today's low 366 00:15:12,064 --> 00:15:15,185 rates and have a more customized plan. 367 00:15:15,395 --> 00:15:18,665 You really don't get a customized plan with an IRA trust, cuz you 368 00:15:18,665 --> 00:15:21,875 gotta go through all those tax landmines and loophole, uh, not 369 00:15:21,875 --> 00:15:27,875 loopholes , uh, tax landmines and obstacles and play by all the rules. 370 00:15:27,875 --> 00:15:30,305 The life insurance may be a better situation. 371 00:15:31,395 --> 00:15:34,430 So it comes down to two things, how much you're going to leave over to the 372 00:15:34,430 --> 00:15:39,320 next generation and how much protection and control you want from the grave, 373 00:15:39,320 --> 00:15:43,820 ruling from the grave to protect the IRA that you worked hard for. 374 00:15:43,820 --> 00:15:47,570 As you said, Jeff, that you worked hard for for 20, 30, 40 years. 375 00:15:47,570 --> 00:15:50,870 Cause if you didn't, you wouldn't have anything to worry about to 376 00:15:50,870 --> 00:15:55,220 protect it for your beneficiaries and from your beneficiaries. 377 00:15:55,340 --> 00:15:57,270 That may be a reason to use a trust. 378 00:15:58,170 --> 00:15:58,550 Jeff Levine: All right. 379 00:15:58,615 --> 00:16:00,055 At least that we can agree on. 380 00:16:00,055 --> 00:16:04,675 Look, there are two sides to every coin ed, as we know, but your life is too 381 00:16:04,675 --> 00:16:06,175 important to leave up to a coin flip. 382 00:16:06,175 --> 00:16:09,325 And that's why these types of issues have to be worked out. 383 00:16:09,325 --> 00:16:12,625 One thing we always agree on ed is that you've gotta work with a knowledgeable 384 00:16:12,625 --> 00:16:15,985 professional to help you sort through the pros and cons of any decision. 385 00:16:16,015 --> 00:16:18,205 And we encourage all of our listeners to do that. 386 00:16:18,445 --> 00:16:20,545 If you'd like to continue to discussion with ed and I make 387 00:16:20,545 --> 00:16:21,645 sure you reach out to us. 388 00:16:21,645 --> 00:16:25,900 You can contact us on social media, reach out to us on Twitter 389 00:16:26,410 --> 00:16:29,430 @TheSlottReport for Ed that's @TheSlottReport, and @CPAPlanner for 390 00:16:29,430 --> 00:16:30,930 myself, let us know what you thought. 391 00:16:30,930 --> 00:16:33,540 Let us know if you've got additional pros and cons that we missed. 392 00:16:33,810 --> 00:16:36,390 And of course, if you've got a topic for a future episode that you'd 393 00:16:36,395 --> 00:16:40,110 like Ed at night to debate, let us know until then Ed it's been fun. 394 00:16:40,110 --> 00:16:42,030 And I look forward to debating you again next week. 395 00:16:42,450 --> 00:16:42,780 Ed Slott: All right.