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  • Wealth Management - August 2017

    by Stacy Wise | Aug 17, 2017

    Should You Name a Trust as Beneficiary of your Retirement Plan or IRA?

    By Rick Imhoff, CFP ®

    A growing issue for individuals planning the disposition of their estate at death is how to control the distribution of retirement plan or IRA assets to their beneficiaries.  Typically, an individual as account owner will designate primary and contingent beneficiaries.  Upon the account owner’s death, the named beneficiary has the option to either take a lump sum distribution or spread the distribution over a period of years.  The account owner has no say in how the funds will be distributed.

    From an income and estate planning perspective, the account owner may desire to control the distribution.  For example, the beneficiaries may be minor children, adult children with special needs, or just incapable of wisely managing money.  In these circumstances, a longer or varied distribution rate may be more desirable or appropriate.

    One viable option for an account owner to control the disposition of these assets is to name a trust as beneficiary.  Various IRS rulings and revised minimum distributions rules have made the designation of trusts as beneficiary a far more attractive option than before, but it must be done right.

    To achieve the benefits of naming a trust as beneficiary, the trust must be considered a “qualifying trust.”  This can be accomplished by the trust meeting four basic criteria:  be valid under state law, be irrevocable at the death of the account owner, have identifiable “human” beneficiaries, and satisfy documentation requirements.

    By meeting these basic criteria, the administrator handling the retirement plan or IRA can “look through” the trustee to the trust’s named beneficiaries as though they had been named as direct beneficiaries by the account owner.  But the difference is that now the account owner can maintain control over the distribution to the named beneficiaries.

    For clarification, many individuals establish a revocable living trust as their primary estate planning document.  These types of trusts can be named as beneficiary of a retirement plan or IRA and they would still be considered a “qualifying trust” because they become irrevocable at the account owner’s death.

    Also, “human” beneficiaries refer to people and not entities.  Estates, charities and corporations can of course be named as a beneficiary, but they do not meet the criteria for a “qualifying trust.”

    While nearly any trust can be named a beneficiary of a retirement plan or IRA, being a “qualifying trust” enables the trust to take advantage of the IRS minimum distribution rules.  But the trustee is not required to pass on more than the minimum distribution, which can help prevent the beneficiaries from rapidly depleting the retirement plan or IRA.  If the trust is not qualified, then the distributions are made under less favorable payout rates.

    Several factors must be considered before making this arrangement, including the size of the estate, the spouse’s age, the number of beneficiaries and their ages, and how large the retirement plan or IRA assets are in comparison to other estate assets.  If you have a large estate, you may want to name your spouse as the primary beneficiary and the children as contingent beneficiaries, which may help to significantly reduce income and estate tax liabilities, as compared to naming the trust as the primary beneficiary.

    Careful planning and drafting of the trust document is essential.  You will need to check with the administrator of your retirement plan to determine if you can name a trust as beneficiary.  If you are considering naming a charity as one of your beneficiaries, keep in mind that for a trust to be a “qualifying trust” it must name “human” beneficiaries.

    Naming a trust as a beneficiary of your retirement plan or IRA can be an effective estate planning tool, but like all estate planning strategies, it must be compared with other options and carefully designed.

    Rick Imhoff, CFP®, is Senior Vice President & Senior Trust Officer for MidAmerica National Bank. He can be reached at 309-647-5000, ext. 1130 or by email.

    Investments are not FDIC-insured, hold no bank guarantee, may lose value, are not a deposit, and are not insured by any federal government agency.


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  • Buzzy's Corner - July 2017

    by Stacy Wise | Jul 24, 2017
    Buzzy made a “super” appearance at the Kid’s Fest in Canton on July 8th. The theme this year was Superheroes, and Buzzy was excited to wear his cape. Over 200 kids visited our booth to make a superhero mask! Buzzy was thrilled to see so many kids. His mom, Muriel Freeman, even made a visit!

    Buzzy at Kids Fest 2017
  • Did You Know? July 2017

    by Stacy Wise | Jul 24, 2017

    Schedule a Meeting

    We know you’re busy. That’s why we’ve added “Schedule a Meeting” to our newly redesigned website! Complete the simple form and we’ll get back to you to set up an appointment. Click here to try it out today!

    Schedule a Meeting

  • Giving Back - July 2017

    by Stacy Wise | Jul 24, 2017

    Great Start Scholarships

    Brittany Murphy and Spencer Theobald have been awarded the first MidAmerica National Bank Great Start Scholarships for the 2017-2018 school year. These scholarships were created to help local students get a “great start” on their education.
     
    Brittany Murphy, the daughter of Jay and Jennifer Murphy, is going to be a sophomore at Illinois Wesleyan University this fall. She is planning to major in Psychology and minor in Exercise Science with a goal of becoming a physical therapist. During her freshman year of college, Brittany played softball, served as a volunteer tutor, and participated in several fundraising events. One of her goals is to visit Honduras in the summer of 2018. This is a trip offered to IWU students where they gain experience providing healthcare to Honduras locals. Brittany says that this scholarship is important to her because it will help with paying tuition and minimizing debt.
     
    Spencer Theobald, son of Brandon and Janel Theobald, will be starting his freshman year at John Brown University this fall. He is planning to study Digital Cinema with a minor in business. After college, Spencer plans to continue making videos, with a possible focus in advertising. At the age of 16, Spencer started his own business, Intelligent Design Media. IDM specializes in aerial photography, videography, and wedding media. Beyond running his own business, Spencer participated in many activities during high school including: football, soccer, student council, Science Olympiad, and cross-country. Spencer said this scholarship will help him reach his goal of graduating from college without student loans.
     
    Brittany and Spencer were each presented with $500 scholarships that will be applied to their college tuition.

    Great Start Scholarship Winner Spencer Theobald

    Great Start Scholarship Winner Brittany Murphy



    Donation to Dolores Kator Switzer Women's Center

    MNB has pledged an additional $10,000 for a total of $20,000 to the Dolores Kator Switzer Women’s Center (DKSWC) at McDonough District Hospital in Macomb. We're proud to be recognized as an “Ambassador” in the MDH Business Honor Roll giving club.

    Donation to Dolores Kator Switzer Women's Center
  • M-Club News - July 2017

    by Stacy Wise | Jul 24, 2017

    The Carol Burnett Show M-Club Trip Report

    The M-Club kicked off the summer by heading to Mt. Morris, IL to see a live recreation of The Carol Burnett Show. Nestled in White Pines State Park is a cozy dinner theater where we enjoyed a delicious buffet lunch and a hilarious show.

    It was almost a three hour drive, and we had a blast the entire bus ride. We competed in a Carol Burnett Trivia contest, played Bingo, and watched The Carol Burnett Show reruns. I don’t think I have ever heard so much laughter on a bus before!

    We had a sunny 70 degree day to enjoy the beauty of White Pines State Park. We enjoyed nice conversation and a leisurely lunch before the show. The actors not only made us laugh by re-enacting some of the most famous Carol Burnett sketches, but they sprinkled in fun facts about Burnett as well.

    For our next trip, we are headed to one of our favorite destinations…Circa ’21 Dinner Theater! We will see Seven Brides for Seven Brothers, which is sure to keep you laughing. If you have never experienced the dessert, architecture, and history of Circa ’21, you do not want to miss this trip.

    View more photos from the Carol Burnett M-Club Trip on our M-Club page and on Facebook!

    It’s also time to start signing up for Christmastime in Branson! We will be seeing a new group of shows this year, including Dolly Parton’s Dixie Stampede. If you have not signed up yet, time is running out to make your reservation. Call me, stop in, or click here to see our trip itinerary.

    Until our next adventure,
    Taylor

    M-Club  at the Carol Burnett Show
  • Supporting Our Communities - July 2017

    by Stacy Wise | Jul 24, 2017

    Fun at the Fourth of July Parade in Henry

    Click here to see more photos from the parade on Facebook!

    Henry 4th of July Parade


    Macomb Community Shred Day

    Thanks to these MNB employees who volunteered and collected 6,712 pounds for shredding last month!

    Macomb Shred Day 2017
  • Wealth Management - July 2017

    by Stacy Wise | Jul 21, 2017

    Putting Trust in Your Estate Plan

    By Rick Imhoff, CFP ®

    Over the past several years, the revocable living trust has become an increasingly popular estate planning tool.  This legal relationship is governed by a trust agreement and among three parties; the grantor, beneficiary, and trustee.

    The grantor is the person who creates the trust and decides, with the help of an estate planning attorney, what the terms of the trust will be.  The grantor, as long as he or she is alive and competent, is the “boss”, meaning the grantor can instruct the trustee to buy and sell assets, make distributions to the grantor or someone else, and can amend or terminate the trust.

    The beneficiary is the person who receives the benefits of the trust.  The grantor, during his or her lifetime, is typically the beneficiary.  Upon the grantor’s death, the beneficiary changes to the individual(s) and/or charitable, religious, or not-for-profit organization named in the trust agreement.

    The trustee is the manager of the trust.  If the grantor is alive and competent, and is able to manage his or her own financial affairs, will typically name themselves as the trustee.  The trustee is responsible for paying bills, investing the assets of the trust, and handling all other financial matters.  In the event of the grantor’s death or incapacity, then a successor trustee (named in the trust agreement by the grantor) will take over the management of the trust.  The successor trustee must adhere to the terms of the trust agreement as specified by the grantor.

    The reason many people choose a revocable living trust as their primary estate planning document is to avoid probate at death.  Any asset titled in the trust’s name at the grantor’s death avoids the cost and delay of probate.  The successor trustee is able to distribute the assets of the trust more quickly without the supervision of the probate court.

    However, one of the major benefits of a trust often times overlooked is that it avoids probate if the grantor becomes incapacitated.  The successor trustee is able to manage the grantor’s affairs, within the guidelines of the trust agreement, without supervision of the probate court.

    Another benefit of the revocable living trust is that the grantor has total control over the trust assets during his or her lifetime.  This means that the grantor can conduct their financial business much like they can as if the assets were titled in their sole name.

    It is important to involve several professionals in the estate planning process.  This team of professionals should include an attorney, accountant, trust officer, and insurance agent.  This group of professionals is very important in developing a workable estate plan centered on a revocable living trust.  It is especially important for business owners, depending on the structure of their business, to work with all these professionals because of the special tax consequences that must be considered when using a revocable living trust.

    To determine if a revocable living trust can work in your situation, you should consult with professionals who specialize in estate planning.  In most cases, there is no charge for initial consultations with these professionals and they can assist you in examining all the options available to you.

    Rick Imhoff, CFP®, is Senior Vice President & Senior Trust Officer for MidAmerica National Bank. He can be reached at 309-647-5000, ext. 1130 or by email.

    Investments are not FDIC-insured, hold no bank guarantee, may lose value, are not a deposit, and are not insured by any federal government agency.

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