Download Printable Article By Michelle L. Ward, JD, LLM, CSEP In recent PLRs 201628004 through 201628006, the IRS considered the effect of a state court action that modified the named beneficiary after the death of the IRA owner. In the rulings, the decedent had originally named three trusts as beneficiaries of his IRAs. The trusts qualified as designated beneficiaries under the IRC Section 401(a)(9) Regulations. When his IRAs were moved to a new custodian, however, the beneficiary was changed to his estate. It was represented that, although the decedent signed the new beneficiary designation form, he merely intended to move…
Surprisingly Common and Dangerous – IRS Foreign Returns
Download Printable Article By Bruce Givner, Esq. Many taxpayers and most all tax professionals have heard about “FBARs” (Foreign Bank Account Reports, on Form TD F 90-22.1). Some taxpayers and most tax professionals are now also familiar with the Form 8938 Statement of Specified Foreign Financial Assets. However, virtually every taxpayer and most tax professionals are completely unaware of the top eight other IRS foreign information forms. In an increasingly interconnected international world, these forms are called for in a surprising number of situations. In fact, they may be all around you if you are not paying attention. Given the…
Are Your Clients (And Their Older Relatives) Wasting Their $5.45 Million Coupon To Increase Tax Basis?
Download Printable Article By Edwin P. Morrow III, J.D., LL.M. (Tax), CFP®, RFC® For many taxpayers, the traditional trust design for married couples is now obsolete. The number of estates paying federal estate tax is minimal. Traditional AB trust designs risk incurring higher income taxes after the first death, and reduced basis increase at the second death. New trust designs can not only mitigate against this risk, but create income tax advantages over outright bequests. Practitioners must now consider the applicable exclusion amount not so much as a “coupon” to exempt estate tax, but a “coupon” to increase basis –…
ABA Heckerling Reports from the 2016 Heckerling Institute
For the past 17 years, the American Bar Association Section of Real Property, Trust and Estate Law with the permission of the University of Miami School of Law, releases several extensive reports highlighting the various lectures and proceedings of the Heckerling Institute, one of the nation’s largest estate planning conferences, held every year in January. This past January 2016, marked the 50th Annual Heckerling Institute. To view, download and access these extensive reports, please click here to visit the ABA’s website. Further, at the above website, you can also access reports from prior Heckerling Institutes as well. We, at The…
Should You Leave Assets in Trust for a Financially Savvy Beneficiary?
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…
Harvesting Capital Losses
Download Printable Article By Robert S. Keebler, CPA/PFS, MST, AEP (Distinguished), CGMA The recent volatility in the stock market should reinforce the idea that it’s not what you earn that counts, but what you keep. In 2013 the top tax rate on dividends and long-term capital gains increased from 15% to 20%. When the 3.8% surtax on net investment income is added, the total tax rate on interest, rents, dividends, annuities, royalties, non-business capital gains and passive activities can increase the total tax rate to as much as 23.8% for long-term capital gains. Over time, taxes can have a profound…
Release of 1st Annual Non-Grantor Trust State Income Tax Chart
Download Printable Article By Steven J. Oshins Esq., AEP (Distinguished) The 1st Annual Non-Grantor Trust State Income Tax Chart is a two-page summary of the non-grantor trust state income tax rules in all states and Washington, D.C. The Chart can be accessed by clicking here. Each state and Washington, D.C. is listed in alphabetical order with the applicable statutory cite that is linked to the online taxing statute. Each jurisdiction’s taxing rules are described briefly so the user can generally know the rules without having to read through the entire statute. The online user should always click the link to…
Federal Income Tax Planning for Trusts
Download Printable Article By Robert S. Keebler, CPA/PFS, MST, AEP (Distinguished), CGMA Following the American Taxpayer Relief Act of 2012 (ATRA), federal income tax planning for trusts is more important than ever. A new 39.6% bracket was added for ordinary income and a new 20% bracket was added for long-term capital gains. Moreover, if the new 3.8% net investment income tax (NIIT) is factored in, the top tax rates are now as high as 43.4% for ordinary income and 23.8% for long-term capital gains. Fortunately, there are a number of tax planning strategies available. These include: (1) Shifting trust income to…
Robert Keebler’s Portability After the Final Regulations Briefing
On June 16, 2015, the IRS released the final regulations pertaining the Portability. The most important issue is confirmation that late corrective elections are available for gross estates under the basic exclusion amount and not available for gross estates exceeding the exclusion. If you have clients (or prospective clients) with sizable income from interest, dividends, rents, capital gains or royalties, you can become a “hero” and their most talked-about advisor. The IRS has now issued its Final Regulations, effective June 12, 2015, and it appears that this new tax is far more complex than originally thought. To help you navigate…