Berdon Blogs

Scott T. Ditman, CPA/PFS

Scott T. Ditman, CPA/PFS
Scott T. Ditman, a tax partner and Chair, Personal Wealth Services at Berdon LLP, advises high net worth individuals and family/owner-managed business clients on building, preserving, and transferring wealth, estate and income tax issues, and succession and financial planning.
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Recent Posts

T&E TALK: Concerned About Challenges to Your Estate Plan? Make it No Contest

Posted by Scott T. Ditman, CPA/PFS on May 15, 2017 10:15:00 AM

Estate planning is all about protecting your family and ensuring that your wealth is distributed according to your wishes. The possibility that someone might challenge your estate plan can be disconcerting. One strategy for protecting your plan is to include a “no-contest” clause in your will or revocable trust (or both).

What is a no-contest clause?

A no-contest clause essentially disinherits anyone who contests your will or trust (typically on grounds of undue influence or lack of testamentary capacity) and loses. It’s meant to serve as a deterrent against frivolous challenges that would result in unnecessary expenses and delays for your family.

Most, but not all, states permit and enforce no-contest clauses. However, the laws differ — often in subtle ways — from state to state, so it’s important to consult state law before including a no-contest clause in your will or trust.

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Topics: T&E TALK

T&E TALK: Asset Valuations Essential for Your Estate Plan

Posted by Scott T. Ditman, CPA/PFS on May 8, 2017 10:15:00 AM

If your estate plan calls for making noncash gifts in trust or outright to beneficiaries, you need to know the values of those gifts and disclose them to the IRS on a gift tax return. For substantial gifts of noncash assets other than marketable securities, it’s a good idea to have a qualified appraiser value the gifts at the time of the transfer.

Adequately Disclosing a Gift

A three-year statute of limitations applies during which the IRS can challenge the value you report on your gift tax return. The three-year term doesn’t begin until your gift is “adequately disclosed.” This means you can’t just file a gift tax return, but also:

  • Give a detailed description of the nature of the gift,
  • Explain the relationship of the parties to the transaction, and
  • Detail the basis for the valuation.
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Topics: T&E TALK

T&E TALK: Be Careful When Using Life Insurance in Your Estate Planning

Posted by Scott T. Ditman, CPA/PFS on May 1, 2017 9:34:55 AM

A life insurance policy can be an important part of your estate plan. The tax benefits are twofold: The policy can provide a source of wealth for your family income-tax-free, and it can supply funds to pay estate taxes and other expenses.

However, if you own your policy, rather than having, for example, an irrevocable life insurance trust (ILIT) own it, you’ll have to take extra steps to keep the policy’s proceeds out of your taxable estate.

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Topics: T&E TALK

T&E TALK: Using a Roth IRA as an Estate Planning Tool

Posted by Scott T. Ditman, CPA/PFS on Apr 24, 2017 9:32:00 AM

A Roth IRA can be a valuable estate planning tool, offering the opportunity for tax-free growth as long as it exists and requiring no distributions during your life — allowing you to pass on a greater amount of wealth to your family. While traditional IRAs are more common, in certain circumstances a Roth IRA might better help you achieve your estate planning goals.

Roth vs. Traditional IRA

With a Roth IRA, you give up the deductibility of contributions for the opportunity to make tax-free withdrawals. This differs from a traditional IRA, where contributions may be deductible and earnings grow on a tax-deferred basis, but withdrawals (less any prorated nondeductible contributions) are subject to ordinary income taxes — plus a 10% penalty if you’re under age 59½ at the time of the distribution.

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Topics: T&E TALK

T&E TALK: Holding Joint Title Has Upsides and Downsides

Posted by Scott T. Ditman, CPA/PFS on Apr 17, 2017 11:45:00 AM

Owning assets jointly with one or more children or other heirs is a common estate planning “shortcut.” But like many shortcuts, it can produce unintended — and costly — consequences.

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Topics: T&E TALK

T&E TALK: Could Your Charity Reject Your Donation?

Posted by Scott T. Ditman, CPA/PFS on Apr 11, 2017 9:22:00 AM

If your estate plan includes charitable donations, be sure to discuss any planned gifts with the intended recipients before you finalize your plan. This is particularly important for donations that place restrictions on the charity’s use of the gift, as well as donations of real estate or other illiquid assets.

Why Your Gift Could Be Rejected

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Topics: T&E TALK

T&E TALK: Keep Family Issues Out of the Public Eye by Avoiding Probate

Posted by Scott T. Ditman, CPA/PFS on Apr 3, 2017 9:22:00 AM

One of probate’s biggest downside is that it’s public — any interested party can find out what assets you owned and how they’re being distributed after your death. The public nature of probate can also draw unwanted attention from disgruntled family members who may challenge the disposition of your assets, as well as from unscrupulous parties. With the right estate planning strategies, you can keep much or even all of your estate out of probate.

What is Probate?

Probate is a legal procedure in which a court establishes the validity of your will, determines the value of your estate, resolves creditors’ claims, provides for the payment of taxes and other debts, and transfers assets to your heirs. Under certain circumstances is can be desirable.  You might feel more comfortable having a court resolve issues involving your heirs and creditors. Another possible advantage is that probate places strict time limits on creditor claims and settles claims quickly.

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Topics: T&E TALK

T&E TALK: Make Health Care Decisions While You're Still Healthy

Posted by Scott T. Ditman, CPA/PFS on Mar 27, 2017 7:00:00 AM

Estate planning is about more than just what happens to your assets after you pass away. It’s also about protecting yourself and your loved ones by having a plan for making critical medical decisions in the event you’re unable to make them yourself.  And the time to act is now, while you’re healthy. If an illness or injury renders you incapacitated, it will be too late.

Without a plan that expresses your wishes, your family may have to make medical decisions on your behalf or petition a court for a conservatorship. Either way, there’s no guarantee that these decisions will be made the way you would want, or by the person you would choose.

2 Documents, 2 Purposes

To ensure that your wishes are carried out, and that your family is spared the burden of guessing or arguing over what you would decide, put those wishes in writing. Generally, that means executing two documents:

  • a living will; and
  • a health care power of attorney (HCPA).
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Topics: T&E TALK

T&E TALK: April 1 - It May be Time to Take Required Minimum Distributions

Posted by Scott T. Ditman, CPA/PFS on Mar 20, 2017 7:00:00 AM

No, you cannot keep retirement funds in your account indefinitely. If you reached age 70½ in 2016, you may need to take a Minimum Required Distribution (MRD) attributed to 2016 for your qualified retirement plans.  

Generally, you must start taking withdrawals from your IRA, SIMPLE IRA, SEP IRA, or retirement plan account when you reach age 70½. Roth IRAs do not require withdrawals until after the death of the owner.

Your MRD is the minimum amount you must withdraw from your account each year.

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Topics: T&E TALK

T&E TALK: Irrevocable Life Insurance Trust — A Great Wealth Preservation Tool

Posted by Scott T. Ditman, CPA/PFS on Mar 13, 2017 7:00:00 AM

Life insurance can provide peace of mind, if you’re concerned about your family’s financial well-being after you’re gone.  Going a step further and setting up an irrevocable life insurance trust (ILIT) to hold the policy offers additional estate planning benefits.

Asset Protection

If you’re concerned about your heirs’ money management skills, an ILIT may be the answer. Your loved ones won’t receive the proceeds directly, as they would if they were the policy beneficiaries. Rather, they’re the beneficiaries of the trust, and the trust controls when they receive proceeds.

You can also establish conditions for distributing funds from an ILIT. For example, you might instruct the trustee to withhold funds from a beneficiary who drops out of school or develops a substance abuse problem.

A properly drafted ILIT can also protect trust assets against your and your beneficiaries’ creditors, particularly if it’s established in a state with favorable asset protection laws.

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Topics: T&E TALK

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