Download Printable Article By Jeremy Spackman, Esq. Absolutely! Traditionally, leaving assets to a beneficiary in trust, especially a financially savvy beneficiary, has been viewed as restricting the access and control the beneficiary would have over his or her inheritance. The common thought was that only spendthrifts should receive their inheritance in trust (with a third party in control of the trust), while the financially savvy beneficiary should receive his or her inheritance outright. This is not ideal since receiving an inheritance outright exposes those assets to the beneficiary’s creditors, including divorcing spouses. Instead, clients should leave assets to financially savvy…
Traps of Swap Powers
Download Printable Article By Martin M. Shenkman, CPA, MBA, PFS, AEP, JD Swap powers have proliferated like Tribbles (you are a Trekkie aren’t you?). Most trusts that are created are structured to be grantor trusts so that the income is taxed to the settlor creating the trust. That continues to reduce the settlor’s estate by the tax paid on income inside the trust. Grantor trusts often include a swap or substitution power that permits the settlor to swap cash into the trust for appreciated trust assets. Swaps are a key to obtaining the new tax planning holy elixir of basis…
Mastering Portability
Download Printable Article By: Robert S. Keebler, CPA/PFS, MST, AEP (Distinguished), CGMA An important provision within the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (“2010 Tax Relief Act”) allows an executor of an estate of a married decedent the option to transfer any unused estate tax exemption amount to the surviving spouse.[1] Thus, for example, if a decedent used only a portion of his or her estate tax exemption, the estate could elect to have the remaining portion pass to the surviving spouse, giving the surviving spouse a larger estate tax exemption.[2] Although this portability provision…
Are You Aware Decanting Causes Tax Issues?
Download Printable Article By Robert S. Keebler, CPA/PFS, MST, AEP (Distinguished), CGMA Decanting is the act of distributing the assets of an old trust to a new one with more favorable terms. It provides an easy, inexpensive method for correcting errors or ambiguities, adapting a trust to changes in a settlor’s objectives or changes in a beneficiary’s circumstances, taking advantage of new planning opportunities or adding flexibility to a trust. However, because trust decanting is a relatively new estate planning strategy, its tax consequences have not yet been clearly established. The IRS is considering ways to address these tax consequences…
Our Top 10 Best Articles on Tax & IRA Planning
As part of our December 2014 Newsletter, we are featuring a special “Best Of” issue. Below, you will find a list of our Top 10 Articles on Tax and IRA Planning. All of these articles were authored and written by Robert S. Keebler, CPA, PFS, MST, AEP (Distinguished), CGMA. Beneficiary Designation Problems with IRAs: More Than Just the RMD Rules! (with Kristen M. Lynch, J.D., AEP, CISP, CTFA) PLR Opens Door to Post-Death Exchanges of Non-Qualified Annuities Tax-Free! (with Michael E. Kitces, MSFS, MTAX, CFP®, CLU, ChFC, RHU, REBC, CASL) Frank Aragona Trust: What Now Constitutes Trustee “Material Participation”? Understanding…
2014 Year-End Tax Planning
By Robert S. Keebler, CPA/PFS, MST, AEP (Distinguished), CGMA As we near the end of 2014, year-end tax planning again takes center stage. In this article we summarize a number of strategies that may produce substantial tax savings with just some year-end tax planning. Making Trust Distributions The tax brackets for trusts are much more compressed compared to the brackets for individuals. This suggests, if the governing instrument allows it, that trustees should consider making discretionary distributions of income to beneficiaries at the end of 2014 to reduce tax rates. Harvesting Ordinary Income Harvesting ordinary income is another part of…
Understanding Portability
By Robert S. Keebler, CPA, MST, AEP (Distinguished) | Volume 2, Issue 3 (March 2014) An interesting provision within the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (“2010 Tax Relief Act”) allows an executor of an estate of a married decedent the option to transfer any unused estate tax exemption amount to the surviving spouse.[1] Thus, for example, if a decedent used only a portion of his or her estate tax exemption, the estate could elect to have the remaining portion pass to the surviving spouse, giving the surviving spouse a larger estate tax exemption.[2] Although this portability…
BREAKING NEWS: IRS Issued Rev. Proc. 2014-18, Granting Relief for Some Late Portability Elections
The IRS issued Rev. Proc. 2014-18 today, announcing that it would grant blanket relief for the estates of persons who died in 2011, 2012, and 2013, if the estate was not required to file a return. The IRS announced that it will allow these estates to file a return to elect portability until December 31, 2014. Any estates of persons dying after 2013 that don’t file a timely return to elect portability can apply for a private letter ruling. For more information, click here to listen to LISI’s 60-Second Planner with nationally renowned CPA, Robert S. Keebler. Also, see Rev….
Robert Keebler’s 2014 Tax Planning Success Kit
More and more, you’re seeing clients (and prospects) turning their attention away from traditional estate tax and financial planning and toward income tax reduction and asset protection. Why? Because of ATRA’s higher ordinary and income tax rates, higher capital gains tax rates, deduction phase-outs and higher estate tax exemption, Obamacare’s “net investment income “surtax”, a higher estate tax exemption, and an increasingly lawsuit-happy society! Fortunately, it’s not difficult to re-tool your practice to meet this new demand for income tax and asset protection planning. You just need to “tweak” how you use many of the techniques already in your bag…
2013 Year-End Tax Planning Ideas (Part 3)
By Robert S. Keebler, CPA, MST, AEP (Distinguished) As we near the end of 2013, year-end tax planning again takes center stage. In the last two newsletters we covered two of the most important year-end planning strategies in detail—loss harvesting and Roth IRA conversions. In this newsletter we summarize a number of other strategies that may produce substantial tax savings. Making Trust Distributions The tax brackets for trusts are much more compressed than the tax brackets for individuals. Trusts begin being taxed at the top rate of 39.6% when income rises above $11,950. By contrast, individuals filing joint returns don’t…