Well, here we go.  Read this post and let the possibilities guide your thoughts to the means to a never-ending legacy.

Face it, some of us aren't leaving anything for the ones we love and others are so petrified of paying their Uncle Sam unnecessarily that they don't mind doing the research it takes to make sure that they leave as much for their families as possible. 

What am I talking about?  Some call it the stretch IRA. Others, the multi-generational account. And still others refer to them as eternal individual retirement accounts. Call it what you want, but this wildly popular retirement tool has fast become the darling of estate planners. And, if used properly, it can save your loved ones a small fortune on the assets you leave behind. "This is a hot topic now since everyone wants to stretch their tax deferral," said Robert Tull Jr., a certified financial planner in Chesapeake, Va. "It's really a fascinating idea today because there is so much wealth out there being transferred to beneficiaries. People are always looking for ways to defer taxes on that." 

    
Stretch the benefits

Multi-generational IRAs are complex investment tools that allow you to extend the tax-deferred status of your IRA long after your death. 
By naming your children and grandchildren as the beneficiaries of your retirement assets, you enable them to stretch out the annual distributions of that IRA over the course of their lifetimes.
    
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Keep in mind that estate taxes, which can climb as high as 55 percent, must be paid in all cases at the time an IRA is passed on to a beneficiary. Those cannot be deferred.
    
The best kept secret

Taxpayers have had the ability to structure multi-generational IRAs for years - but because of IRS defining regulations, it's just now starting to catch on. This has been legal since 1986, but for some reason people have just started to notice it. Before, many advisers didn't even recognize it. If someone died, they'd just pay out the IRA immediately. There's good reason to avoid that. In most cases, the value of the IRA you pass on to your heirs could be two to four times greater if you structure it as a multi-generational IRA. Don't believe me?  Here is a quick example:

EX.

Assume that you leave a $100,000 IRA to a five-year-old beneficiary who has an estimated life expectancy of 77.7 years, according to current IRS life expectancy tables. If the account earned an 8% average annual rate of return, its value could grow to $1.67 million by his or her 55th birthday. And that amount is on top of the nearly $790,000 in taxable RMDs (Required Minimum Distributions) that would have been withdrawn from the account during the 50-year time period.

Listen, If you plan it well, with a long deferral period, it can be worth a lot more.
    
Structuring the stretch

There are four primary approaches to structuring a stretch IRA. The most common are the traditional, spousal-rollover, participant-direct and mixed, or combination, approach. 
     
In the traditional set-up, the spouse is the primary beneficiary and the children or grandchildren are the contingent beneficiaries. This is often the method of default for multi-generational IRAs, but literature on the industry suggests it can also be the least advantageous since distributions and income tax deferral are extended only through the life expectancy of the oldest beneficiary. 

By using the spousal rollover approach instead, you'll be able to break up your retirement assets into several IRAs. Your spouse remains the primary heir and your children or grandchildren become the beneficiaries with their own IRAs. This strategy, when structured correctly, allows the distributions and income tax deferrals to extend throughout the lifetime of the beneficiaries you name. That, in turn, provides significantly more tax deferral and a much longer opportunity for that IRA investment to grow. 

If neither you nor your spouse need to dip into the IRA during your lifetime, you could also consider structuring your multi-generational IRA using the Participant Direct approach, which can provide the greatest tax benefit of all. Using this strategy, you'll be asked to break up your retirement assets into several different IRAs much as you would with the spousal rollover -- only this time it's your children and grandchildren, not your spouse, who are listed as the primary beneficiaries. That means you'll be able lower the amount of the minimum distributions you are forced to take out once you hit age 70-1/2, leaving more money behind for your heirs. 

Lastly, there's the mixed approach, a hybrid of sorts in which a portion of the stretch IRA is structured as a spousal rollover and the remainder under the participant direct category. You may want to give this strategy a closer look if the surviving spouse does not need the IRA assets but wants to keep a tight grip on the reigns while he or she is still alive.
    
Benefits

A few things you should know about the stretch IRA:
 
First, if you're getting up in years and still aren't sure how you want to structure the IRA for your heirs, keep in mind that the clock is ticking. You have to make a decision on whether you want to set up a multi-generational IRA by April 1 of the year after you've turned 70-1/2. Otherwise the government decides for you. 
    
Also, if you've accumulated a large portfolio of IRA investments -- as so many baby boomers these days have -- and you're passing that on to your grandchildren, it's wise to hold the limit to $1 million. Anything left to them beyond that point will get hit with the none-too-friendly "generation- skipping tax." You want to avoid that so don't leave more than $1 million to your grandchildren in these IRAs. 
    
Also, make sure that when your beneficiaries inherit those retirement assets, they know not to dip into that money to pay off the estate tax bill. That would result in a double whammy effect on your beneficiaries, since they'd be paying income taxes on the IRA money they're taking out and they'd lose the compounded earnings they otherwise would have accrued.
    
Competence is paramount

Be careful, too. Setting up a stretch IRA without crossing your t's and dotting your i's can cost your heirs dearly in the end. Instead of extending your tax deferral, they'll instead be facing some pretty hefty estate and income taxes on your estate. That could eat away up to 80 percent of the pot. 
It's really important to get it right. There are still not that many (financial advisers) who understand how this works, so it's worth asking around for recommendations on someone who deals with this topic regularly.

Remember, to do your research and consult a tax professional for further guidance on state specific guidelines. 

Hope this get's your juices going and let me know what you think.