I have worked on several trust disputes that could have been avoided or reduced if the trust creation had been done with more forethought.
First, let me say that these are NOT cases in which I prepared the trusts. These are cases in which trusts were prepared by others and then brought to me after the original trustee was deceased.
What is especially upsetting about the recent trust disputes I have seen is that several of these issues caused huge fights among family members. Surely the deceased relative did not wish to start family feuding.
Remember that creating a trust has as its main purpose preventing or reducing major complications and costs upon your death. Thus, if your trust does not meet the needs of your specific situation, you may not have achieved this.
Most articles about the passage of the Tax Cuts and Jobs Act in December buzz about the resulting income tax consequences for individuals and businesses.
But what about the intersection of the TCJA and estate planning?
In a report by Stefi Gascon Hafen, published by AccountingToday, she comes to some interesting conclusions about the TCJA’s significant impact on estate planning. Read More
It is not uncommon anymore that a US Citizen has parents and elders living in foreign countries who may have set up trusts in those countries under (obviously) its laws. There are also US Citizens who have expatriated to/ now live in foreign countries and set up trusts for their children there.
Today’s post was prompted by questions from several clients about an urban legend that seems to be perpetuating itself out there: “You do not have any US tax reporting requirements if you are a US citizen/ permanent resident and your foreign assets and/ investments are in a foreign trust.”
If you have believed this to be true and set up a trust in a foreign country or are thinking of taking this step or are just Read More
September 15 – Corporations
File a 2014 calendar year income tax return (Form 1120 or 1120-A) and pay any tax, interest, and penalties due. This due date applies only if you timely requested an automatic 6-month extension.
September 15 – S Corporations
File a 2014 calendar year income tax return (Form 1120S) and pay any tax due. This due date applies only if you requested an automatic 6-month extension.
September 15 – Corporations Read More
The three month highway funding extension was passed by the House July 29 and by the Senate July 30. The president signed the bill into law on July 31. The law contains several important tax provisions changing the due dates for partnership and C corporation returns, FinCEN Form 114-Report of Foreign Bank and Financial Accounts (FBAR), several common tax returns and several other IRS information returns It also overrules the Supreme Court’s Home Concrete decision, requires that additional information be reported on mortgage information statements, and requires consistent basis reporting between estates and beneficiaries. Read More
With an estimated 8.7 Million expatriates living around the world, many are unaware of their U.S. tax filing obligations. For those following the issues surrounding FATCA, they are well aware that expatriates are angry and scared. For the two-thirds of the U.S. expatriates who are still unaware, we bring knowledgeable experts who will explain what is happening and get you up to date at the Internet Tax Summit scheduled September 21-25th 2015. The first day of the Internet Tax Summit, expatriates will be able to go online and learn what is happening from tax experts, get answers, and get the help they need. You can expect this historical, free online event is certain to get millions of expatriates up to speed on the only country in the world with citizen based taxation. We promise the information you learn will be STUNNING! Read More
Property ownership in continental Europe is often fraught with some unique issues upon death. Most countries including Italy, Spain and France impose “forced heir-ship” rules. Accordingly, a portion of the property must pass to the children of the decedent at the time of death; spouse of the decedent can not be made the sole beneficiary of the Estate. As a result spouse cannot sell the property at his or her own will and must obtain consent form the children prior to selling. This causes many issues for the U.S. beneficiaries in terms of Estate tax.
Effective from August, 2015, the EU have decided to change these rules. The new EU rules envisage that the citizens of the U.S. can make a choice in their will that the U.S. law would apply to foreign property in an EU state. This would enable them to bequeath the Read More
Advance planning can, in many cases, minimize or even avoid taxes on IRA distributions and other qualified plan distributions. When contemplating future retirement and when to begin tapping taxable IRA and other qualified retirement accounts, taxpayers need to consider a number of important issues.
Early Distributions (before 59.5) – If funds are withdrawn before reaching age 59 ½, the taxpayer is also subject to a 10% early withdrawal penalty (and state penalties if applicable) in addition to the income tax on the IRA distribution, unless what is referred to as the substantially equal payment exemption is utilized. Under this exception, an early retiree can begin taking substantially equal payments at least once a year over the owner’s life or joint lives of the owner and designated beneficiary. The payments must Read More
Tax Code Changes Create Challenges
How do you work and coordinate with attorneys and financial planners?
We make it a point to communicate with the client’s attorney and financial planner anytime we see anything of financial or legal significance that has happened or is likely to happen. For example, in some cases, by combining the estate and gift tax exemption with the proper use of certain irrevocable trust, millions of dollars in estate and gift taxes may be avoided. If we see that a client may potentially benefit from this type of strategy, we will work closely with his/her attorney and financial planner to implement a plan.
Tax Code Changes Create Challenges
Inheritance taxes and estate planning are a growing concern for affluent baby boomers. What are some of the major issues?
In addition to the double step-up in basis on community property discussed above, the baby boom generation will benefit from some of the most generous estate tax loopholes in history. For example, married couples have complete spousal exemption from estate and gift tax when transferring property to each other. This has not always been the case.
For 2015, every person has a lifetime net gift and estate tax exemption up to $5.43 million. Considering that the top gift and estate tax rate is 40%, this exemption represents an Read More
An endowment is a donation of money or property to a non-profit organization for the ongoing support of the organization. It may be structured that the organization leaves the principal amount intact and is only permitted to spend the income from the investments in the endowment funds. Less commonly, the gift may be structured allowing the organization to spend the principal amount. If this is the case, there may be restrictions placed upon the amount of principal that may be spent annually. Many non-profit organizations, most notably colleges and universities may have endowments of millions of dollars. It is less common for a church to have endowment funds, although it is not unheard of.
Not everyone favors a church having endowment funds. Some feel that any funds in Read More
Today I received a frantic telephone call from the adult daughter of a senior citizen client for whom I prepared an estate plan 10 years ago. Unfortunately, the man, who is a widower, had a serious stroke. He is alive but is not communicative. The daughter called and asked if I had prepared a Durable Power Of Attorney. Even though I had prepared a Will and a Living Will, the client had insisted that he did not want a Power Of Attorney.
Specifically, this client is a very private person and wanted to be in complete control of all of his assets. I had suggested that we establish a Trust, with him being the Trustee and having one of his children as a Co-Trustee who could take over if he came incapacitated. That was rejected. Read More