- 1). Meet with a financial planner. Determine the allocation of assets that meet your financial needs. This should include stocks, bonds, real estate and other private equity transactions.
- 2). Combine retirement assets into one self-directed IRA. If you are still employed, you may not be able to move assets until you leave the company. Choose an IRA provider that allows investments in real estate deeds, properties and limited partnerships. The IRS allows these investments but not all IRA custodians do. Pensco and Entrust are two companies that are capable of housing these assets and performing all required custodial documentation for them.
- 3). Hire an estate attorney to establish an LLC that is partnered with your IRA. The LLC manages the property including any debt with the IRA owning the deed.
- 4). Create a "QTIP" or "Inheritor's Trust" that becomes the sole beneficiary of your IRA. This trust is separate from a family trust. In it, you can name grandchildren (younger beneficiaries) to benefit from the IRA, spreading the IRS Required Minimum Distributions over the life expectancy of the eldest beneficiary in the Inheritor's Trust. For example, if you leave the IRA to three grandchildren, ages 3, 4 and 5, the trust will distribute assets based on the life expectancy of a 5 year old as opposed to the life expectancy of your spouse.
- 5). File beneficiary change paperwork with the IRA custodian. Now that all legal paperwork has been completed, adjust the portfolio based on your decisions in Step 1.
- 6). Hire a tax advisor to file appropriate tax paperwork for your new trust documents and LLC/IRA relationship. The LLC and trust both require IRS Employer Identification Numbers.
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