Pity the poor estate planners. They are like zookeepers managing an ever increasing menagerie of exotic beasts, creatures of the tax code and regulations designed to take maximum, albeit legitimate, advantage of the complexities increasingly built into the system.  For example: CRATs, CRUTs, FLPs, Zeroed-Out CLATs, Stretch IRAs, RMDs, GRUTs, DAPTs, Grantor Trusts, SLATs, etc. This week’s entry on the firm’s Trusts and Estates blog continues earlier references to retirement accounts and adds a “new” member to the zoo, a STAT. It all calls to mind a quote from the writer Barbara Ehrenreich:

“It seems to me that there must be an ecological limit to the number of paper pushers the earth can sustain, and that human civilization will collapse when the number of, say, tax lawyers exceeds the world’s total population of farmers, weavers, fisherpersons, and pediatric nurses.”

The Trusts and Estates community is awash in articles on the proposed changes to the tax laws, the latest scare articles concern the increases  in the capital gains tax that may not only effect the very wealthy but may also capture many middle class taxpayers who have owned homes for lengthy periods of time. If those income taxes are made law and made retroactive, then the law may have a major impact on people that are not very wealthy.

Another source of worry, one that may be relevant to a large number of all taxpayers, is the concern over retirement accounts in light of the recently enacted SECURE Act. “SECURE” stands for “Setting Every Community Up for Retirement Enhancement Act.” (I kid you not, think of the hours a young and highly-credentialed Congressional staffer spent on concocting that acronym.)

In an article called “The ABCs of Estate Planning for IRAs Under the Secure Act,” one of the countries leading experts on estate planning, Natalie Choate,  writes on issues worthy of our consideration. Read it if only to learn what a STAT is. The link for the article is:  Morningstar Articles.

Ms. Choate writes,

“The ‘ABC’ (and sometimes ‘D’) system described here is designed to cut through that confusion and get you quickly to the estate planning options for each type of beneficiary and their minimum distribution consequences. The client has only four options for how he can leave his IRA to any beneficiary. The ABCD approach gets you instantly to the RMD effect of each approach. Here goes:

In the client’s beneficiary designation form for the client’s IRA:

A: The client names the beneficiary directly.

B: The client names a “conduit trust” for the beneficiary.

C: The client names a see-through accumulation trust for the beneficiary.”

Finally, on a personal note, Phil Schaap has passed away. You may ask, “Who?” If you do, then you are not a fan of American music. He was the great historian, producer, promoter, and raconteur of America’s one great contribution to world culture, Jazz. Every morning, for almost 50 years, Phil would hold forth on WKCR on the music of Charlie Parker. The show was called Bird Flight. I hope his alma mater, Columbia, that sponsored his radio show has an archive of his broadcasts. He was a recipient of the 2021 NEA Jazz Masters honor. He should have been honored much earlier. This link to a short video from Jazz at Lincoln Center, with which he was long associated, is worth your time. RIP, Phil, and thanks, Jazz at Lincoln Center.