1. The IRA Protection Trust How to Protect Your IRA Account For Your Beneficiaries from: Excessive Inheritance tax Excessive Income tax Divorce or Creditors Mistakes in “Exploding” the IRA Law Offices Tom Sammons 502 N. Plum Grove Rd. Palatine IL 60067 [email_address] www.lawsam.com 847-359-9610

12. Each Child Can withdraw Based on their Age . Each beneficiary can use his or her own life expectancy to take withdrawals from the IRA. For example, Child 1 is 40 years old, he can take 1/44 out of the IRA the year after the client’s death (and pay income taxes on the 1/44th) and rest of the account would continue to grow tax deferred. Turn on and off distributions. The trustee can turn on and off distributions from the IRA as the need arises. Child 2 became disabled and had little in other funds, so the trustee of the IRA Protection trust was able to “turn off” distributions from the IRA, but the IRA money continues to accumulate for Child 2 in the trust . Client’s $500,000.00 IRA $166,666 Child 1 40 yrs old $166,666 Grandchild 1 18 years old $166,666Child 2 30 yrs old Passes to kids of Child 1 on Child 1’s death (not spouse) - This is “ locked in” Child 1 has a large estate of her own. The IRA is free of estate taxes-saving her a substantial amount of estate tax Grandchild 1 is divorced after Client’s death- The IRA is protected in the divorce Distributions to Child 2 are stopped by the trustee (but money continues to accumulate in the trust) because he becomes disabled and receives Social Security Disability (SSI) - Later, distributions restart when SSI is not needed.

13. Locking in the Beneficiary . The client was concerned that Child 1’s spouse was to “pushy” and that he would influence the beneficiary choice, so the Client “locked in” the end beneficiaries to be the children of Child 1 (making sure the spouse did not end up as an accidental or intentional beneficiary) No estate taxes on funds in IRA Protection Trust. The money in the IRA Protection Trust is not taxed in the estate of the beneficiary. (The IRA is included in the estate of Client). For beneficiaries with large estates, this is a major benefit. Divorce Protection . Grandchild 1 is younger than the other two. She can take distributions from the IRA using her life expectancy. She is divorced at a young age, but the IRA is in the IRA Protection Trust, so it is not dragged into the divorce. Client’s $500,000.00 IRA $166,666 Child 1 40 yrs old $166,666 Grandchild 1 18 years old $166,666Child 2 30 yrs old Passes to kids of Child 1 on Child 1’s death (not spouse) - This is “ locked in” Child 1 has a large estate of her own. The IRA is free of estate taxes-saving her a substantial amount of estate tax Grandchild 1 is divorced after Client’s death- The IRA is protected in the divorce Distributions to Child 2 are stopped by the trustee (but money continues to accumulate in the trust) because he becomes disabled and receives Social Security Disability (SSI) - Later, distributions restart when SSI is not needed.

14. Benefits of Tax Deferral inside the IRA Protection Trust

15. How Income Tax Eats an “Exploded” IRA Brown area is Income taxes paid. More than $166,000.00. No immediate income tax on IRA Protection Trust

16. Growth of “Exploded” IRA over 20 years 20 years later: $335,000 “exploded” account grows to $736,855 - Pretty Nice…huh