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I hope that one day you have accumulated a great property. You will be a tycoon. Warren Buffett and Donald Trump will want to know the secret of their success. You want to pass your huge estate on to your heirs, and you want to do it in the most profitable way with the lowest taxes. And I hope you don’t name a trust as the beneficiary of your retirement plans, because it’s a very bad idea.

It’s a bad idea for everyone, with or without a large property. Having a trust as the beneficiary of your IRAs, 401ks, and retirement plans can drastically reduce the value of your estate after your death. How? If humans inherit their retirement plans, they can take the required minimum distributions during their lifetime. They can take out little by little and potentially stretch that money (and their taxes) for the rest of their lives. But what is the life expectancy of an inanimate being, like a trust? It is zero; therefore, all taxes are due as soon as you die. Imagine that your heirs inherit $ 100,000 from you and then they have to turn around and write a check for $ 40,000 to the IRS. Could occur. If you name a trust as a beneficiary, you may have inadvertently forced all of your retirement plan taxes to be due on the date of your death.

Get my point: don’t name a trust as a beneficiary unless you want your family to have to pay 40 percent of the bill in taxes on Day 1. There are certain new types of trusts that can be used as IRA beneficiaries, but they are very, very complicated. As always, be sure to speak with a specialist who thoroughly understands trusts and your financial situation before doing anything, so your heirs can get the most out of your estate.

SOCIAL SECURITY AND DIVORCED SPOUSE

At one of my recent seminars, a woman stood up during the question and answer session. “I was married to my husband for more than ten years,” she said, “but now we are divorced. Can I apply for Social Security based on my ex-husband’s history?”

It’s a good question and I think it might be important to some of you. Yes, a divorced spouse can receive benefits on an ex-spouse’s Social Security record, but there are a few rules:

You must be at least 62 years old.
You must have been married to your ex-spouse for at least ten years.
You need to be single. What if you remarry? The official website of the US Social Security Administration says: “Generally, we cannot pay benefits if the divorced spouse remarries to someone other than the former spouse, unless this last marriage terminates (either by death, divorce, or annulment), or if the marriage is to a person entitled to certain types of Social Security survivor or ancillary benefits. ”
Your own Social Security benefit must be less than the amount you would get on your ex-spouse’s record. If you receive more benefits based on your own record, you cannot apply for them.
Your ex-spouse must be eligible to receive benefits.
Keep in mind that your ex does not have to receive benefits. However, if your ex-spouse is not collecting Social Security yet, then you must have been divorced from him for at least two years.

If you (and your ex) meet all of those criteria, you may be entitled to benefits based on your ex-spouse’s Social Security history.

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