Berdon Blogs

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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Topics: T&E TALK

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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Topics: T&E TALK

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

T&E TALK: TCJA Expands Appeal of 529 Plans in Estate Planning

Posted by Scott T. Ditman, CPA/PFS on Feb 5, 2018 7:00:00 AM

It’s common for grandparents to want to help ensure their grandchildren will get a high quality education. And they also want the peace of mind that their wealth will be preserved for their children and grandchildren after they’re gone. If you’re facing these challenges, one option that can help you conquer both is a 529 plan. And it’s become even more attractive under the Tax Cuts and Jobs Act (TCJA).

529 in Action

In a nutshell, a 529 plan is one of the most flexible tools available for funding college expenses and it can provide significant estate planning benefits. 529 plans are sponsored by states, state agencies, and certain educational institutions. You can choose a prepaid tuition plan to secure current tuition rates or a tax-advantaged savings plan to fund college expenses. The savings plan version allows you to make cash contributions to a tax-advantaged investment account and to withdraw both contributions and earnings free of federal — and, in most cases, state — income taxes for “qualified education expenses.”

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Topics: T&E TALK

T&E TALK: Preserve Your Wealth with Asset Protection Strategies

Posted by Scott T. Ditman, CPA/PFS on Jan 29, 2018 8:27:37 AM

There are many techniques to protect your assets, from giving them to loved ones to placing them in offshore trusts. It’s important to understand that asset protection isn’t about evading legitimate debts, hiding assets, or defrauding creditors. Rather, it’s about preserving your hard-earned wealth in the face of unreasonable creditors’ claims, frivolous lawsuits, or financial predators.

Assess Your Risk

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Topics: T&E TALK

T&E TALK: How the Tax Cuts and Jobs Act Impacts Estate Planning

Posted by Scott T. Ditman, CPA/PFS on Jan 22, 2018 7:00:00 AM

The Tax Cuts and Jobs Act of 2017 (TCJA) made sweeping revisions to the tax code that altered federal law affecting individuals, businesses and, estates. Focusing specifically on estate tax law, the TCJA doesn’t repeal the federal gift and estate tax. It does, however, temporarily double the combined gift and estate tax exemption and the generation-skipping transfer (GST) tax exemption.

Beginning after December 31, 2017, and before January 1, 2026, the combined gift and estate tax exemption and the generation-skipping transfer (GST) tax exemption amounts double from an inflation-adjusted $5 million to $10 million. For 2018, the exemption amount is $11.2 million ($22.4 million for married couples). Absent further congressional action, the exemptions will revert to their 2017 levels (adjusted for inflation) beginning January 1, 2026. The marginal federal tax rate for all three taxes remains at 40%.

Estate Planning Remains a Necessity

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Topics: T&E TALK

T&E TALK: Include Potential Incapacity in Your Estate Planning Strategies

Posted by Scott T. Ditman, CPA/PFS on Jan 15, 2018 7:00:00 AM

Most estate plans focus on what happens after you die. But without arrangements for what will happen in the event you become mentally incapacitated, your plan is incomplete. If an accident, illness, or other circumstances render you unable to make financial or health care decisions — and you don’t have documents in place to specify how these decisions will be made, and by whom — a court-appointed guardian will have to act on your behalf.

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Topics: T&E TALK

About Berdon Blogs

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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T&E TALK: Gain insights into how changes in tax laws, shifts in the financial markets, and regulatory concerns will impact assets and affect preserving and transferring wealth.

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