Below is a brief glance at what you’ll find in the July/August 2013 issue.
Link to issue: July/August 2013

The BDIT: Have your cake and eat it too
Many people are reluctant to consider advanced estate planning strategies because they’re not ready to give up control over their property. A beneficiary defective inheritor’s trust (BDIT) is a relatively new tool that, when structured properly, allows one to take advantage of sophisticated tax planning and asset protection techniques without losing control or enjoyment of the trust assets. This article explains how it works, with a sidebar offering a specific example.
Should you consider a Roth IRA conversion?
Converting all or a portion of a traditional IRA to a Roth IRA can allow one to turn tax-deferred future growth into tax-free growth and take advantage of a Roth IRA’s estate planning benefits. As this article explains, a Roth’s exemption from minimum distribution requirements allows funds to continue growing tax-free for many years. And, since amounts converted into a Roth IRA face immediate taxation, heirs will benefit by receiving future distributions tax-free. But whether this makes economic sense depends on several factors.
Using an FLP as an income tax planning tool
For many years, family limited partnerships (FLPs) have been a popular vehicle for consolidating and managing family wealth while reducing gift and estate taxes. Now that fewer people are subject to these taxes, an FLP may have lost some of its appeal as an estate planning tool. But with individual income tax rates at their highest level in years, it’s important to not overlook an FLP’s potential as an income tax planning tool. Transferring limited partnership interests to children or other family members in lower tax brackets can reduce a family’s overall tax liability.
Estate Planning Red Flag: Your will contains a formula clause
Now that the federal estate tax exemption has been set permanently at an inflation-adjusted $5 million (currently, $5.25 million), fewer people are subject to federal estate tax. But that doesn’t mean estate planning is any less important. Out-of-date formula clauses, in particular, can create unwelcome surprises. This article shows how an outdated plan can end up effectively disinheriting the very person it’s supposed to benefit.