Article On The Top IRA Complexities For Estate Planners

Warren L. Baker recently published an article entitled, Self-directed IRAs –Top Five Complexities for Estate Planning Attorneys, 41 Real Prop., Tr. & Prob. 1 (2014). Provided below is an excerpt from the article:

Over the past decade, the term “self-directed IRA” has become a more widely used term within the financial world, but its exact meaning is still quite vague. Generally, the term “self-directed IRA” (“SDIRA”) is used to describe an IRA that is able to invest in “alternative” or “nontraditional” assets, although even those terms are difficult to define. After all, more and more brokerage firms have increased the ability of their account holders to invest in assets that do not fall into the traditional categories of “stocks, bonds, and mutual funds,” though these brokers generally stop short of allowing investments in privately held companies, real estate, and other more obscure (but legally permissible) IRA investments. After a brief discussion of the three basic types of SDIRAs, this article focuses on five challenges that arise for estate planning attorneys when a client holds a SDIRA which either directly or indirectly (i.e. through an entity) invests in “nontraditional” investments. Many of the complexities discussed in this article are not entirely unique to SDIRAs, but the specific challenges are often magnified because of the illiquidity or uncertain value of the assets in which they invest.