Berdon Blogs

T&E TALK: Missed the 60-day IRA Rollover Deadline? Apply for a Waiver

Posted by Scott T. Ditman, CPA/PFS on Apr 16, 2018 7:01:00 AM

IRAs and employer-sponsored plans such as 401(k)s are powerful retirement savings tools, but they also provide valuable estate planning benefits. If you hold a traditional IRA for life, for example, your children or other heirs can stretch out distributions over their lifetimes, maximizing the IRA’s tax-deferred growth and preserving more wealth for the family. If, however, you receive a distribution from an employer plan (such as when you change jobs or retire) and you don’t roll over the funds into an IRA or new plan within 60 days, you can lose these benefits.

What are the Tax Consequences?

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T&E TALK: Securities Laws Can Impact Your Estate Planning

Posted by Scott T. Ditman, CPA/PFS on Apr 9, 2018 7:00:00 AM

For a variety of estate planning and asset management purposes, many high net worth families hold their assets in trusts, family investment vehicles, or charitable foundations. If assets held in this manner include interests in hedge funds, private equity funds, or other “unregistered” securities, it is important to ensure that the entity is qualified to hold such investments.

Certain exemptions under the federal securities law require that investors in private funds and other unregistered securities qualify as “accredited investors” or “qualified purchasers.”

What is an Accredited Investor?

Accredited investors include financial institutions and other entities that meet certain requirements, as well as certain officers, directors, and other insiders of the entity offering the securities. They also include individuals with either:

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T&E TALK: Prevent Power of Attorney Abuse

Posted by Scott T. Ditman, CPA/PFS on Apr 3, 2018 7:00:00 AM

A financial power of attorney — sometimes called a “power of attorney for property” or a “general power of attorney” — can be a valuable estate planning tool. The main disadvantage is that it is susceptible to abuse by scam artists, dishonest caretakers, or greedy relatives.

Help or Harm?

The most common type is the durable power of attorney, which allows someone (the agent) to act on behalf of another person (the principal) even if the person becomes mentally incompetent or otherwise incapacitated. It authorizes the agent to manage the principal’s investments, pay bills, file tax returns and handle other financial matters if the principal is unable to do so stemming from illness, advancing age, or other circumstances.

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T&E TALK: Keeping a Trust a Secret Could Violate State Law

Posted by Scott T. Ditman, CPA/PFS on Mar 26, 2018 9:35:05 AM

If your estate plan includes one or more trusts, you may have a good reason for wanting to keep them a secret. For example, you may be concerned that, if your children or other beneficiaries knew about the trust, they might spend recklessly or neglect educational or career pursuits. Despite your good intentions, however, the law in many states requires trustees to disclose certain information to beneficiaries.

Disclosure Requirements

One example can be found in the Uniform Trust Code (UTC), which more than 20 states have adopted. The UTC requires a trustee to provide trust details to any qualified beneficiary who makes a request. The UTC also requires the trustee to notify all qualified beneficiaries of their rights to information about the trust.

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Topics: T&E TALK

T&E TALK: Four Estate Planning Tips for the “Sandwich Generation”

Posted by Scott T. Ditman, CPA/PFS on Mar 19, 2018 7:02:00 AM

The “Sandwich Generation” accounts for a large segment of the population. These are people who find themselves caring for both their children and their parents at the same time. In some cases, this includes providing parents with financial support. As a result, estate planning — which traditionally focuses on providing for one’s children — has expanded in many cases to include aging parents as well.

Including your parents as beneficiaries of your estate plan raises a number of complex issues. Here are four tips to consider:

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Topics: T&E TALK

T&E TALK: Follow IRS Rules to Receive Your Charitable Income Tax Deductions

Posted by Scott T. Ditman, CPA/PFS on Mar 12, 2018 7:03:00 AM

If reducing your taxable estate is an important estate planning goal, making lifetime charitable donations can help achieve that goal and benefit your favorite organizations. In addition, by making donations during your lifetime, rather than at death, you can claim income tax deductions. But some of your charitable deductions could be denied if you don’t follow IRS rules.

Three Things to Know

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Topics: T&E TALK

T&E TALK: Only Certain Trusts May Own S Corporation Stock

Posted by Scott T. Ditman, CPA/PFS on Mar 5, 2018 9:36:16 AM

S corporations must comply with several strict requirements or risk losing their tax-advantaged status. Among other things, they can have no more than 100 shareholders, can have no more than one class of stock, and are permitted to have only certain types of shareholders.

In an estate planning context, it’s critical that any trusts that will receive S corporation stock through operation of your estate plan be eligible shareholders.

Eligible trusts include:

Grantor Trusts. A grantor trust is eligible provided that it has one “deemed owner” who’s a U.S. citizen or resident and meets certain other requirements. Also, when the grantor dies, the trust remains an eligible shareholder for two years, after which it must distribute the stock to an eligible shareholder or qualify as a qualified subchapter S trust (QSST) or an electing small business trust (ESBT).

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Topics: T&E TALK

T&E TALK: Do You Need to File a Gift Tax Return?

Posted by Scott T. Ditman, CPA/PFS on Feb 26, 2018 7:00:00 AM

Gifting assets to loved ones is one of the simplest ways of reducing your taxable estate. However, what may not be as simple is determining whether you need to file a federal gift tax return (Form 709) for the year in which those gifts are made. With the April 17 filing deadline approaching, now is the time to find out an answer.

When a Gift Tax Return is Required:

A Form 709 is required if you:

  • Made gifts of present interests — such as an outright gift of cash, marketable securities, real estate, other tangible property, or payment of expenses other than qualifying educational or medical expenses (see below) — and the total value of all gifts to any one person exceeded the 2017 annual exclusion amount of $14,000 ($15,000 for 2018),
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T&E TALK: Life Insurance is a Powerful Tool for Nontaxable Estates

Posted by Scott T. Ditman, CPA/PFS on Feb 19, 2018 7:00:00 AM

For years, life insurance has played a critical role in estate planning, providing a source of liquidity to pay estate taxes and other expenses. It’s been particularly valuable for business owners, whose families might not have the liquid assets they need to pay estate taxes without selling the business.

Under the Tax Cuts and Jobs Act, the estate tax exemption has climbed to an inflation-adjusted $10 million through 2025 (projected to be just over $11 million for 2018). Even before the increase, federal estate taxes weren’t a concern for the vast majority of families, and now even fewer families are at risk. But even for nontaxable estates, life insurance continues to offer significant estate planning benefits.

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T&E TALK: Have You Taken State Estate Taxes into Account?

Posted by Scott T. Ditman, CPA/PFS on Feb 12, 2018 7:00:00 AM

The Tax Cuts and Jobs Act has doubled the federal gift and estate tax exemption, with inflation-adjustments projected to raise it to $11.18 million for 2018. This means federal estate taxes are a concern for fewer families, at least in the short term. (The doubled exemption expires December 31, 2025.) But it’s important to consider how state estate or inheritance taxes may affect your estate plan.

There’s uncertainty about how states will respond to the increased federal estate tax exemption. One line of thought is that many states will continue to “decouple” from the federal exemption and impose their own estate tax exemptions at a lower amount.

Establishing Residency in a New State

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Topics: T&E TALK

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Our experts examine the latest trends, economics, business conditions and industry issues to provide timely information you need to maximize your tax advantages and meet your financial goals.

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