NU Online News Service, April 2, 5:58 p.m. – Most financial planners think baby boomers will have problems passing their assets on to heirs, because a high percentage of their money is accumulating in retirement accounts set up without provisions for estate taxes.
Cogent Solutions, Princeton, Mass., a developer of wealth-conservation software for financial planners, presents that conclusion in a report on a recent survey of 400 planners about “income with respect to decedent” troubles.
IRD items are the items in a client’s estate that are subject to significant taxes at the time of the owner’s death.
Cogent found that 94% of the planners believe IRD losses could become a major headache for their wealthy clients and the heirs of those clients.
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More than three-quarters of the clients’ savings are held in individual retirement accounts and other qualified accounts that are vulnerable to estate taxes. Meanwhile, 71% of the planners say their clients are afraid to do anything about estate planning because of uncertainty over the future of the federal estate tax laws.
No matter how much uncertainty there might be in Washington, a planner has to make sure clients’ heirs will have enough ready cash to pay the estate taxes, according to Dwight Davenport, Cogent’s chief executive. Otherwise, Davenport warns, IRD losses will deplete the clients’ estates and damage the planner’s reputation.