By Steven J. Oshins, Esq., AEP (Distinguished) It finally happened. California passed SB 131 in its 2023 legislative session which, among other things, sadly contains a provision treating all so-called Incomplete Non-Grantor Trusts (“ING Trusts”) as grantor trusts taxed to the settlor. This takes away a key tool planners have used for many years to reduce California state income tax on taxable income not sourced to California. The legislation is effective retroactive to January 1, 2023, so many California residents were wrongly punished for following the law that existed prior to the date this legislation passed. It remains to be…
SECURE 2.0 Act Enhances Special Needs—See Through Trust Planning
By Edwin P. Morrow, III, J.D., LL.M., MBA, CFP®, CM&AA® and Nancy H. Welber, J.D., ACTEC Thanks to the generosity of Leimberg Information Services, we are pleased to provide you this recently published article on LISI. EXECUTIVE SUMMARY Section 337 of the Secure 2.0 Act, effective in 2023, provides a welcome, though very limited in scope, enhancement to special needs trusts designed to receive retirement benefits and qualify as see through trusts under the Secure Act provision for applicable multi-beneficiary trusts (AMBTs). The new provision provides that most charities can now be remainder beneficiaries after the death of a disabled…
Why Do Nevada and Delaware Get Most of the ING Trust Business?
By Steven J. Oshins, Esq., AEP (Distinguished) We keep hearing about NING Trusts (Nevada) and DING Trusts (Delaware). Occasionally, but much less often, we hear about WING Trusts (Wyoming) too. Nevada and Delaware clearly get the vast majority of the ING Trust business. Wyoming seems to be the next jurisdiction to take a reasonably good chunk of the pie. Is this because these jurisdictions actually have the best laws? Or is it simply a function of good marketing? The words “NING”, “DING” and “WING” just roll off the tip of your tongue, eh? Let’s take a close look at ING…
Poll Results: Which Is the Best Trust Jurisdiction?
By Steven J. Oshins, Esq., AEP (Distinguished) In a one-week LinkedIn poll conducted in March of 2023, I asked thousands of people primarily made up of estate planners and financial planners: “Which is the best trust jurisdiction?” Among 5,104 “impressions” (number of times users see the poll question), there were 123 total votes. The permitted responses were limited to Nevada and South Dakota simply because these are so clearly the two best trust jurisdictions and therefore there was no reason to dilute the votes by including additional options. Results The results were as follows: *Nevada …
9th Annual Non-Grantor Trust State Income Tax Chart Released!
By Steven J. Oshins, Esq., AEP (Distinguished) Different states have different rules as to what creates a “resident trust” that is subject to taxation in that state. States may tax a trust based on the residency of the settlor or testator, based on whether there is a resident trustee or beneficiary or whether there is administration in that state, or for a combination of these factors and/or other similar factors. So it isn’t as easy as simply situsing a trust in a state with no state income tax. You have to look at the state taxing statutes that may apply….
Update on Washington State 7% Capital Gains Tax
By Steven J. Oshins, Esq., AEP (Distinguished) One of the most anticipated tax cases in some time has begun its way through the courts. On January 26, 2023, the Washington Supreme Court heard arguments in Chris Quinn v. State of Washington which is a case examining the constitutionality of the Washington State 7% capital gains tax. The Washington capital gains tax was passed by the Democrats and signed into law in 2021. There’s a $250,000 exemption for individuals and married couples, so only the capital gains in excess of $250,000 are subject to the tax. Capital gains taxes would not…
Projecting the Year-by-Year Estate and Gift Tax Exemption Amount
By Steven J. Oshins, Esq., AEP (Distinguished) The federal estate and gift tax exemption is currently $12,060,000 per person. This number increases (or decreases) each year based on inflation and then is rounded. This article does nothing extraordinary. It simply lays out the projected increases over the next few years based on the most recent inflation rate which is 8.5%. Anybody with a calculator can compute these numbers, but many people have not yet done so, so the numbers outlined herein may come as a shock! Trump Tax Act The Trump Tax Act increases (or decreases) the federal estate and…
Did You Know That Nevada Has Laws Allowing for Larger Valuation Discounts Than in Every Other State?
By Steven J. Oshins, Esq., AEP (Distinguished) Estate planners have been rushing to help clients make large gifts before the gift and estate tax exemption drops in half at the end of 2025. But are estate planners truly maximizing the wealth transfer for their clients? Most are not doing so, simply because they’re failing to take advantage of a legislation I authored that passed and became law in Nevada’s 2009 legislative session. This was likely overlooked because the gift and estate tax exemptions exponentially increased soon after that thereby making it unnecessary for the smaller net worth clients to fully…
Steve Oshins Releases the 8th Annual Non-Grantor Trust State Income Tax Chart!
By Steven J. Oshins, Esq., AEP (Distinguished) State income tax avoidance planning has become a necessary area of expertise for all estate planners. After all, how can an estate planner design a trust without first analyzing the income tax effects of selecting residents of different states as trustees? The 8th Annual Non-Grantor Trust State Income Tax Chart The 8th Annual Non-Grantor Trust State Income Tax Chart is a summary of the state income tax rules for non-grantor trusts and highest state income tax rate from state to state. It simplifies the analysis by summarizing each state’s taxing rules and providing…
IRS PLR Approves Adding Formula General Power of Appointment for Basis Step Up
By Edwin P. Morrow, III, J.D., LL.M., MBA, CFP®, CM&AA® In PLR 202206008, the IRS approved of a judicial modification (approval of settlement) of a GST grandfathered trust to add a formula testamentary general power of appointment that would enable the remainder beneficiaries to receive a step up in basis over such assets at the primary beneficiary (child of settlor) powerholder’s death. The IRS ruled that 1) this addition did not disturb the GST exempt nature of the trust or cause any adverse GST consequences and that 2) it would cause estate inclusion over only the desired amount (more on this…