Whether to name a trust for a special needs child as beneficiary of any qualified retirement plan assets requires careful consideration.  While income tax deferral can be obtained by structuring the trust as a conduit trust, the required distributions from such a trust may be inconsistent with the child's situation.  Alternatively, the trust can be structured as an accumulation trust, but this may not yield optimal income tax benefits.  If there are other assets available, it is often best to fund the special needs child's trust with assets other than qualified retirement funds. 

When planning for high-net-worth individuals, tax reduction is always a key issue.  Unfortunately, the focus on taxes often comes at the expense of other, equally important, objectives.  This is driven, in part, by our training.  Lawyers, CPAs and financial advisors are trained to identify, analyze and solve legal and financial issues.  To fully satisfy clients' needs, however, we must move beyond this framework, become true counselors and focus on the personal issues our clients bring to the table. To achieve this goal, the issues discussed above should be explored closely with the client.

Robert J. Morrill, Esq., is a partner at Gilmore, Rees & Carlson, P.C., in Wellesley, Mass., one of New England's largest estate-planning boutique law firms.

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