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Trust Taxation Basics

May 7, 2021 by Leave a Comment

General income tax rules. The typical revocable trust is not a separate entity for income tax purposes, and the grantor is taxed on trust income at individual tax rates. Subject to certain exceptions, the typical irrevocable trust is a separate entity for income tax purposes, and the trust pays income tax on undistributed income and on its capital gains at trust income tax rates. Another way to say this is that the trust receives a deduction for amounts distributed to trust beneficiaries.

Trust income tax rates are compressed. In fact, whereas an individual must earn in excess of $523,600 before the 37% tax rate kicks in, a trust must pay that rate on income in excess of just $13,050. Obviously, there is often an incentive for a trust to distribute income to beneficiaries.

Grantor trusts. All trusts, including irrevocable trusts, classified as grantor trusts are not separate entities and therefore pay no tax. Instead, the grantor pays the tax. Grantor trusts are trusts in which the grantor retains one or more specific powers or interests in a trust such as the power to revoke or amend the trust or the so-called swap power or power to substitute assets of equal value. When the grantor dies, these retained powers die with her. Thus, the trust becomes a taxable entity with its own tax ID.

Simple and Complex trusts. Simple trusts are trusts that distribute all income and do not distribute principal or make charitable contributions. All other trusts are complex trusts.

Estate tax planning. The terms to keep in mind here are “unlimited marital deduction,” “basic exclusion amount,” “bypass trust,”[1] and “qualified terminable interest trust” or “QTIP.” The unlimited marital deduction is the IRS’s gift to married couples because it allows couples to defer estate taxes until the death of the surviving spouse, unless 1. the surviving spouse is not a citizen of the U.S. or 2. the property interest that passed to the survivor is a terminable interest; that is, an interest that passes upon the survivor’s death.

The reason for the 2nd exception should be clear: the IRS wants to collect its pound of flesh sometime. Without the exception, there would be nothing left to tax when the spouse dies. The first exception is justified due to the worry the foreign spouse will die outside the U.S. and possibly pay not pay the estate tax bill. Non U.S. spouses do have an annual exemption of $159,000 on transfers and can defer estate taxes via a qualified domestic trust or QDOT, which is structured such that the estate tax will be paid on the 2nd death.

In addition to the marital deduction trust, the bypass trust is the other go-to tool for estate planners helping their wealthy clients avoid the estate tax. Simply put the bypass trust works like this: 1. Fund the trust with the basic exclusion amount of (currently) $11,700,000. This money/property can avoid the taxman—possibly forever. The remaining property goes into the marital trust, taking advantage of the decedent’s basic exclusion amount and ensuring the property will be taxed at the 2nd spouse’s death. This trust is often a QTIP or terminable interest trust that will qualify for the marital deduction and which will allow the grantor to take care of the surviving spouse until he dies. The trust will contain directions where the property will go after the spouse dies—typically to the children.

Disclaimer Trusts

There are disclaimers and then there are qualified disclaimers, disclaimers that don’t result in gift of estates taxes on the transfer. We’re interested in IRS qualified disclaimers.[2] To be qualified, a disclaimer must

  1. Be irrevocable and unqualified,
  2. Be in writing,
  3. Be received by the transferor, his legal representative, or holder of legal title no later than a date that is 9 months after the later of
    1. The day on which transfer is made or
    1. The day on which the transferee turns 21,
  4. Be given before the person disclaiming has accepted any interest or benefits, and
  5. Pass without any directions from the person disclaiming and pass either
    1. To the spouse of the decedent, or
    1. To a person other than the disclaimer.

Disclaimers are tool sto allow grantors and spouses to defer decision making where things are uncertain—and aren’t they almost always? For example, what if when planning was originally done, the estate was well below the threshold for application of the estate tax, where there might not have been a reason for funding a credit shelter trust. Instead, all the property either went into the marital trust or was distributed outright. Years later, the estate has grown substantially. When the grantor dies, the surviving spouse or some other beneficiary could disclaim, resulting in the disclaimed amount funding the credit shelter trust and thus saving estate taxes.

Of course, this approach has its drawbacks, chief among them being the reluctant beneficiary. Money talks after all.

Crummey Powers and the IRS

Crummey v. Commissioner[3] is the reason we have Crummey powers in our legal lexicon. The case involved a trust into which the Crummeys made annual gifts of $3,000 to each of their children (you can give %15,00 per child per year in 2021). The children, in turn, had the right to withdraw $3,000 each year from the trust. The Crummeys claimed that the withdrawal right qualified the yearly gifts as present interests and therefore eligible for the annual exclusion. Ultimately, the 9th Circuit agreed with them, even their argument that the gifts in trust to the two minor children were also present gifts, arguing that “We interpret that [that “the demand couldn’t be resisted”] to mean legally resisted and, going on that basis, we do not think the trustee would have any choice but to have a guardian appointed to take the property demanded.[4] In 1973, the IRS issued Rev. Rul. 73-405, which said

[A] gift in trust for the benefit of a minor should not be classified as a future interest merely because no guardian was in fact appointed. Accordingly, if there is no impediment under the trust or local law to the appointment of a guardian and the minor donee has a right to demand distribution, the transfer is a gift of a present interest that qualifies for the annual exclusion allowable under section 2503(b) of the Code.

Why is this important? Because using Crummey powers, people can remove assets from their estate via trusts. Because using Crummey powers, people can pay premiums on a life insurance policy in an ILIT (irrevocable life insurance trust). But remember, the Crummey power works because the donee of the power has the right to withdraw. Best practice dictates that donees receive a letter each time a gift to the trust is made, alerting them to the fact that they do have that right.

I Can Help

If you would like to explore these or other ideas further, schedule a virtual meeting with me by clicking on the red button in the lower right-hand corner of this webpage for a free consultation.

[1] Also referred to as the credit shelter trust or family trust or B trust.

[2] IRS Code §2518

[3]  397 F.2d 82 (9th Cir. 1968)

[4] Id 88

Filed Under: Estate Planning, Estate Tax, Taxes, Trusts, Wealth Transfer

Probate vs. Non-Probate Property: Which Property Can Pass Outside of Probate?

April 18, 2020 by Leave a Comment

Probate is the legal process where a court proves, or validates, the decedent’s will; appoints his or her personal representative; and often oversees the collection, distribution, or sale of the decedent’s property. The probate property, that is. Thus, it is important for the practitioner to know the difference between probate and non-probate property. The easy, but unsatisfactory answer is that probate property is anything other than non-probate property. So what is non-probate property; that is, what property passes at death without a permission slip from the court?

Here’s another easy, but more instructive answer: non-probate property is property that does not pass under the decedent’s will.  As the list below illustrates, that could include a lot of property:

Non-Probate Property

Property that passes by beneficiary designation, which generally includes:

  • Life insurance policies (but see below),
  • Annuities,
  • Individual retirement accounts or IRAs,
  • Roth IRAs,
  • Employee Stock Ownership Plans or ESOPs,
  • Pension Plans, including
  • Defined Benefit Plans,
  • Money Purchase Plans,
  • 401(k) Plans,
  • 403(b) Plans,
  • Simple IRA Plans (Savings Incentive Match Plans for Employees),
  • SEP Plans (Simplified Employee Pension),
  • SARSEP Plans (Salary Reduction Simplified Employee Pension),
  • Payroll Deduction IRAs,
  • Profit Sharing Plans,
  • Governmental Plans under 401(a),
  • 457 Plans,
  • 409A Nonqualified Deferred Compensation Plans,
  • Payable-on-Death or POD Accounts,
  • Transfer-on-Death of TOD Accounts, including investment accounts,
  • Property that passes by deed, which includes:
  • Real estate owned in 1. joint tenancy with rights to survivorship (JTWS), 2. life estate where property passes to another upon death of life tenant, and 3. any property the decedent held in a life estate,
  • Property that passes by account designation, which includes: 1. Bank accounts owned jointly, and 2. brokerage accounts owned jointly,
  • Vehicles owned jointly,
  • Safety deposit boxes,
  • Other property that falls within the definition of a “non-probate transfer,” including ; 1. Insurance policies, contracts of employment, bonds, mortgages, promissory notes, deposit agreements, pension plans, trust agreements, conveyances, or virtually any other written instrument effective as a contract, gift, conveyance, or trust.
  • Property owned by a trustee of a trust. (Of course, if the decedent is the settlor of a trust, that trust will be subject to an administration somewhat similar to the administration that takes place in probate, but away from the prying eyes of both a judge and the public.)

Non-probate property bypasses Go, bypasses the court, and goes directly to the beneficiary, the joint account holder, the joint owner. Often the movement of the property from the decedent owner to the surviving owner is virtually seamless—well, painless anyway: beneficiaries file a death claim with the insurance company, attach a death certificate, and voila! the death proceeds appear. But often the movement requires a trip to the DMV. Even that need not be a chore. If the word “or” separated the two names on the title, the survivor doesn’t have to do anything; however, if he or she wishes to remove the decedent’s name off the title, then mailing or hand-delivering a “Vehicle Application for Title” to the DMV along with a check to cover the cost of removing the name, will do the job. If the word “and” separates the name, the survivor will also need to provide a death certificate.

Likewise, the surviving owner(s) of real property owned in a JTWS must take a few steps to terminate the decedent’s interest in the property under most states’ probate code, including filing an affidavit substantially similar to the statutory form in the county where the property is located and attaching a copy of the death certificate. (By the way, if the decedent owned real estate as a trustee of a trust, the successor trustee should file a similar affidavit along with a death certificate, indicating that the successor trustee has assumed the position of the deceased trustee with regard to the property.)

It should go without saying, but I’ll say it anyway: non-probate property will pass to the intended beneficiary, account holder, surviving owner notwithstanding what the decedent said in his or her will. In other words, the beneficiary designation, the deed, the POD/TOD, etc. controls the disposition of non-probate property, not the will.

Probate Property

If non-probate property includes everything on the list above, probate property includes everything else, including the following:

  • Life insurance/annuities payable to the insured’s estate,
  • Personal property—art, furniture, antiques, and the like—not jointly owned,
  • Real estate the decedent owns either as an individual or as a tenant in common,
  • Accounts owned individually by the decedent, including
    • Bank accounts,
    • Brokerage accounts,
    • Etc.
  • Any other property the decedent owned individually at death.

And if it’s probate property, the court will have some say about who gets what, governed by the decedent’s will of course.

The Attorney’s Job

The probate attorney’s or personal representative’s or PR’s job is to separate the non-probate wheat from the probate chaff. To do that, the attorney or PR should consult the relevant documents. That requires gathering account statements, life insurance policies, retirement plan beneficiary designations, titles, deeds, and the like to determine how the property is owned and who the beneficiaries are in the relevant cases. That may turn out to be more difficult than it seems, largely because you can’t be sure the decedent’s heirs know fact from fiction. Thus, don’t rely on the life insurance policy in the decedent’s file drawer to tell you who or what is the beneficiary. Ask the life insurance agent or call the company to get a copy of the most recent beneficiary designation. Call the title company to pull the most recent vesting deed. (You might even go further, some attorneys argue that there’s no need to record a deed to a revocable trust; thus, the most recent recorded vesting deed may not be the most recent deed.) In other words, check primary sources.

Filed Under: Administration, Ancillary Probate, Elective Share, Estate Planning, Estate Tax, Insurance, Intestacy, Living Will, Probate, Succession Planning, Trusts, Wills Tagged With: , , ,

Trusts and the People Behind Them

April 17, 2020 by Leave a Comment

First, let’s discuss the parties or positions in a trust. To form a trust, you need at fill at least three positions. Nowadays, you can have as many as two more:

One or more Settlors/Grantors/Trustors/Trust Makers. The person (or persons) who creates the trust, whether during his or her lifetime or at death. In Wyoming and Utah, Settlor or Grantor is the preferred term, though the other terms are used as well. The terms mean the same thing. Utah’s definition reads, “’Settlor’ means a person, including a testator, who creates . . . a trust.” In contrast, Wyoming’s definition reads, “’Settlor’ means a person, including a testator, grantor or trust maker, who creates . . . a trust.”

The perfect trustee?

One or more Trustees. A fiduciary (either an individual or an entity) named in the trust document who holds legal title to trust property for the benefit of the . . .

One or more Beneficiaries. Person or persons, entity or entities, charities or otherwise, for whose benefit the settlor created the trust in the first place. The beneficiary may have a present, future, vested, or contingent interest in trust property. Beneficiaries may be income or remainder beneficiaries. Settlors can be beneficiaries of their trust.

Trust Protector. Someone named in the trust other than trustee with powers granted by the trust document, often including a limited power to remove the trustee, appoint a replacement, add beneficiaries, and maybe modify the trust. In other words, a trust protector is someone a trustee should pay attention to. Modern trusts often have trust protectors (and advisors, see below) to add flexibility to the trust.

Trust Advisor. Though the term is sometimes used interchangeably with trust protector, a trust advisor is more of an advisor than an enforcer, guiding the trustee in the exercise of her powers. That said, the place to define these two terms is in the trust agreement.

First, here are three important definitions and four basic types of trusts, especially as to the taxation of trusts:

Complex trust. A trust that either retains all current income or distributes corpus or makes distributions to charitable organizations.

Simple trust. As described in tax law, a trust that must distribute all income at least annually and which doesn’t provide for charitable distributions.

Grantor trust. A trust over which the settlor (aka the grantor) retains power to revoke or to control trust property. Consequently, the settlor/grantor is taxed on trust income. Most living trusts are grantor trusts.

Living trust. Also known as an inter vivos trust, a living trust is one established and funded during the settlor’s lifetime as opposed to a testamentary trust (see below), which comes into being upon the settlor’s death. A living trust can be either revocable or irrevocable. The settlor of a revocable living trust is typically also the initial trustee of the trust.

Revocable trust. A living trust over which the settlor retains the power to revoke the trust.  

Irrevocable trust. A trust over which the settlor retains no right to revoke. Irrevocable trusts are generally used to remove assets out of the taxable estate of the settlor. Once a settlor dies, his or her revocable becomes irrevocable. Likewise, once the creator of a testamentary trust dies, his or her trust is irrevocable.

Testamentary trust. A trust created by will and which comes into being upon the death of the testator or maker of the will.

Now, in no particular order, here’s a brief summary of many of the trusts in use today:

Charitable trusts. A trust for the benefit of a charity (government, educational, religious, and similar institutions). There are a variety of charitable trusts, including a charitable lead trust (CLT)—defined as a trust for a fixed period, during which the charity receives the trust income and after which, the remainder goes to a non-charitable beneficiary—or a charitable remainder trust (CRT), which essentially reverses those roles.

Irrevocable life insurance trust (ILIT). An irrevocable trust designed to own life insurance, so the insurance remains outside the insured’s estate and free of estate tax.

Pet Trust. A trust established to take care of the settlor’s pets in the event of the settlor’s death or disability.

Firearms or NFA Trust. A trust to hold firearms generally and National Firearms Act firearms specifically. Such trusts allow for the sharing of NFA firearms without violating transfer rules governing NFA firearms.

Special Needs Trust (SNT).  A trust designed to hold assets for the benefit of a beneficiary whose disabilities may allow the beneficiary to receive public assistance for medical and other care expenses.

Standalone Retirement Trust (SRT).  A trust designed to receive “qualified retirement accounts” like IRAs, 401(k)s, etc. It can be either revocable or irrevocable, and it’s designed to allow trust beneficiaries to defer income tax on the account for as long as possible—i.e., stretch the IRA. SRTs can be either conduit trusts (distributions flow through them and out to the beneficiaries) or accumulation trusts (any trust that is not a conduit trust).

Grantor Retained Annuity Trust (GRAT). A special type of irrevocable trust. The settlor/grantor establishes the trust, puts property in, and takes back an annuity (calculated as a dollar amount) for a specific amount of time based on the value of the property in the trust.

Intentionally Defective Grantor Trust (IDGT). An irrevocable trust that removes the value of the trust assets out of the settlor’s estate but allows the grantor/settlor to continue to be treated as the owner for income tax purposes. A big advantage of IDGTs is that grantor/settlor can add value to the trust by paying the income tax due on trust income without those tax payments being treated as additional taxable gifts to the trust.

By-pass or Credit Shelter Trust. Also known as the B Trust that holds that part of the deceased spouse’s estate that is applied against the deceased’s applicable exclusion amount, thus protecting it from estate taxes.

Marital Trust. Also known as the A Trust, this trust holds the portion of the deceased spouse’s estate that qualifies for the unlimited marital deduction. That portion will later be included in the surviving spouse’s taxable estate. The Marital and Credit Shelter Trusts are generally created by the trustee of the settlor’s Revocable Living Trust or Testamentary Trust upon the settlor’s death.

Qualified Personal Residence Trust (QPRT). This trust works like a GRAT except that the property transferred into the trust is the Settlor’s personal residence. The Settlor retains the right to live in the home for a specified number of years. At the end of the term, the Settlor must move out or begin paying rent to the trust, which goes to beneficiaries entitled to the trust property after the initial term.

Qualified Domestic Trust (QDOT). A form of trust that allows a taxpayer whose surviving spouse is a non-citizen to claim the marital deduction. To qualify, 1. at least one U.S. citizen must be a trustee, 2. the trust can’t allow distributions of principal unless the U.S. trustee has the right to withhold estate tax on the distribution, and 3. sufficient trust assets must be held in the U.S., among other things.

QTIP Trust. A trust that can hold qualified terminable interest property, property the settlor sets aside for the surviving spouse and which qualifies for the marital deduction.

Domestic Asset Protection Trust (DAPT). An irrevocable trust that allows a settlor to set aside assets in trust and protect those assets from creditor claims. The DAPT is established under the laws of states with favorable asset protection laws—Nevada, Alaska, South Dakota, Wyoming, and Utah, for example.

Filed Under: Dynasty Trust, Estate Planning, Estate Tax, Gun Trusts, NFA Trusts, Trust Protectors, Trusts Tagged With: , , , , ,

Celebrity Estate Planning Mistakes that Keep on Giving–to the Wrong Person

March 8, 2017 by Leave a Comment

My dad was a life insurance salesman. I remember rummaging around in his sales materials and finding a service he subscribed to that reported on the estate tax problems of the rich and famous and even the not-so-famous. He used the  reports to make the point that his prospective clients needed to do some estate and insurance planning, so their families wouldn’t face similar fates.

I was reminded of this when I stumbled upon this 2013 article from Forbes, “Monumental Estate Planning Blunders of 5 Celebrities.” The piece details the woes of rocker Jim Morrison, Rat Pack icon Sammy Davis Junior, hotelier Leona Helmsley,  QB Steve McNair, and, my favorite sad story, actress Marilyn Monroe:

Some celebrities have erred by not going far enough with their estate planning. For instance, famous actress and model Marilyn Monroe left most of her estate to her acting coach, Lee Strasberg.

“She left him three-fourths of her estate, and when he died, his interest in Marilyn’s estate went to his third wife, who did not even know Marilyn. Marilyn’s mistake was not putting her assets in trusts,” says Nass.

Strasberg’s third wife, Anna, eventually hired a company to license Monroe’s products, which involved hundreds of companies including Mercedes-Benz and Coca-Cola. In 1999, many of Monroe’s belongings were auctioned off, including the gown she wore to President John F. Kennedy’s birthday party, for more than $1 million. Strasberg ended up selling the remainder of the Monroe estate to another branding company for an estimated $20 million to $30 million, according to a remembrance of the star by NPR in 2012.

It’s unlikely Monroe would have wanted someone she didn’t know to profit so handsomely from her belongings. A trust would have provided for Strasberg while he was alive and then after his death could have directed the remainder of her estate to someone of her choosing.

Yes, I imagine was very unlikely that she wantedStrasberg’s 3rd wife to laugh all the way to and from the bank. But poor planning allowed that to happen.

Filed Under: Estate Planning, Estate Tax, Financial Advisors, Probate, Taxes, Trusts, Wealth Transfer, Wills

Just Leave It Alone?

February 21, 2017 by Leave a Comment

As many will recall, then candidate Trump promised to eliminate the estate tax. That was then. This is now–he’s the President. What will he actually do? Will he also eliminate the estate tax’s two siblings: the gift tax and the generation skipping tax? No one knows, though many people care, especially those who preach tax fairness.

Given that married couples currently have to be worth almost $11 million dollars before  the estate tax kicks in–it’s more complicated than that, but still–eliminating the estate tax is going to help only the very, very wealthy. And maybe that’s a bad (or a good) thing.

I’m here to argue for the advisor. Estate planning attorneys, life insurance and investment advisors, CPAs and financial planners. I’m betting that each and every one of them agree with the following:

Because the estate tax generates a meager 0.005 percent of annual tax collections, according to I.R.S. figures, it generates far more political debate than federal revenue. And among many tax planners, the calls aren’t so much for reform as for stability, or at least a period of benign neglect.

“Just leave it alone so we can plan,” Mr. Jenney said. “But every administration seems to want to put their own twist on the estate tax.”

Filed Under: Attorneys, Business Planning, Estate Planning, Estate Tax, Family Business, Farms and Ranches, Financial Advisors, Gift Tax, Insurance, Life Insurance, Tax Court, Taxes, Trusts, Wills

Estate Planning Seminar at Pleasant Grove Library

February 13, 2017 by Leave a Comment

I’ll be presenting a seminar on DIY — Do It Yourself — Estate Planning at the Pleasant Grove Library on Wednesday, March 8, 2017 at 7 PM. Come an enjoy the discussion. The address is 30 E Center St, Pleasant Grove.

If you have a question about wills, trusts, and other aspects of estate planning, maybe I can answer it.

Filed Under: Advance Health Care Directive, Ancillary Probate, Basis, Blended Families, Charitable Giving, DAPT, Decanting, Dynasty Trust, Estate Planning, Estate Tax, Guardians, Health Care Power of Attorney, Insurance, IRA, Life Insurance, Living Will, Power of Attorney, Probate, Stepfamilies, Succession Planning, Tax Court, Trust Protectors, Trusts, Wealth Transfer, Wills

How One Family’s Legacy is an Example to Your Family

February 8, 2017 by Leave a Comment

So by now, you probably know that the Larry and Gail Miller family insured that the Utah Jazz would forever be the Utah Jazz--musical Mormon jokes aside (by the way ever heard of BYU’s Synthesis?). They did so via a so-called dynasty or legacy trust, a trust intended to live on and on and on, well beyond the lifetimes of the Millers and their children and even their grandchildren.

I intend to write more on this subject, but for now think about what financial legacy would you like to leave your family, your city, your school? A well-drafted trust will allow you to do that.

 

Filed Under: Dynasty Trust, Estate Planning, Estate Tax, Trust Protectors, Trusts

Gift and Estate Planning Coupons May Worth Less After This Election

September 8, 2016 by Leave a Comment

When you give money or property to someone while you’re alive, you make a gift. If that gift is beyond a certain size, you will also have to pay a gift tax on it. When die, your money or property will go to those whom you name as your beneficiaries in your will or trust. But yet again, if your estate is beyond a certain size, your estate will have to pay a tax on it, this time an estate tax.

clinton-trumpNow Uncle Sam has, of late, been pretty generous**. He’s given each of us coupons* to pay that tax–up to a certain amount. Currently, each of us has a lifetime coupon worth $5,450,000; that is, each of us can give away (or devise or bequeath upon our death) $5,450,000 without having to pay any gift or estate tax. And if we’re married, we can combine these “applicable exclusion amounts” so that as a couple we can give away twice that amount, or $10,900,00 without any gift or estate tax being assessed.

It gets better. In addition to the amounts I just mentioned, each of us can make annual gifts of $14,000–an annual coupon, if you will–to as many people as we want, family, non family, friends, and enemies. Every year! And if we’re married, we can combine our gifts. That’s $28,000. Gift tax free.

And if you finally do have to pay an estate or gift tax? The top rate is 40%.

All that was to tell you this: If Hillary Clinton is elected, she’s promised to reduce the applicable exclusion amount–the large lifetime coupon–to just $3,500,00 for an individual, $7,000,000 for a married couple. That’s almost a $4 million drop from present levels. I’m unsure at this time if she had any plans to reduce the annual gift coupon.

Donald Trump wants to repeal the estate tax.

FWIW, this is not a political post, or at least I don’t intend it to be. Just the facts. And that’s that.

*In addition to the two “coupons” discussed in this post, there’s a third, the unlimited marital deduction, which allows spouses to pass property between one another without tax consequences. Ultimately, the last to die may have an estate tax bill to pay.

**Generous is being generous. We’re talking about money that is not Uncle Sam’s to begin with, but humor me here.

Filed Under: Estate Tax, Gift Tax, Taxes

Get Your (Valuation) Discounts Now!

August 15, 2016 by Leave a Comment

Two weeks ago, the Treasury Department released proposed IRS Code Section 2704 valuation regulations that, as proposed, will dramatically change the discounts currently allowed, including so-called minority and marketability discounts. Thus, gift and estate tax planning strategies that rely on such discounts to transfer property from one individual to another via the use of limited liability companies, family limited partnerships, and other such entities may not work so well in the future.

The IRS has scheduled hearings on the proposed regulations for December 1, 2016. Sometime after that hearing the regulations will become final; thus, anyone planning on taking advantage of such discounts has little time to waste.

As I learn more about the proposed changes, I’ll follow-up on this blog. If you can’t wait that long, the AICPA has a number of helpful resources.

Filed Under: Estate Tax, Family Business, LLCs, Taxes, Wealth Transfer

Trustees and Beneficiaries: More Good News than Bad?

May 9, 2016 by Leave a Comment

I really like the idea behind “The Positive Story Project,” a new monthly column at Wealthmanagement.com. Here’ the first three paragraph from the opening salvo:

My goal in writing this column is to focus thinking within our community of practitioners—important players in the transfer of wealth to younger generations.   And, with so much at stake for our clients and their families—a good deal more than preservation of financial assets—let’s make this column a conversation.

Can the widespread dissatisfaction and all the talk of “problem” beneficiaries and “problem” trustees, give way to more creative and productive relationships?  I say:  “Absolutely.”  And, if your intuition is the same as mine, the harder question becomes “how do we get from here to there?”

To begin to find out, my colleague, Kathy Wiseman, and I have been going to the source—beneficiaries, trustees and their advisors—asking them for positive stories about moments in time when their relationships have worked well.  I’ll discuss what can be learned from these individuals and their stories in this column each month.

I look forward to more on this subject, both to help me as a practitioner and to inspire my clients and potential clients to use trusts to better carry out their wishes.

Filed Under: Charitable Giving, Estate Planning, Estate Tax, Family Business, Farms and Ranches, Probate, Trusts, Wealth Transfer
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