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.
Find me on:

Recent Posts

T&E TALK: Consider an Intrafamily Loan to Cover Estate Taxes

Posted by Scott T. Ditman, CPA/PFS on Dec 10, 2018 7:00:00 AM

Sometimes estates that are large enough for estate taxes to be a concern are asset rich but cash poor, without the liquidity needed to pay those taxes. An intrafamily loan is one option. While a life insurance policy can be used to cover taxes and other estate expenses, a benefit of using an intrafamily loan is that, if it’s properly structured, the estate can deduct the full amount of interest upfront. Doing so reduces the estate’s size and, thus, its estate tax liability.

Deducting the Interest

An estate can deduct interest if it’s a permitted expense under local probate law, actually and necessarily incurred in the administration of the estate, ascertainable with reasonable certainty, and will be paid. Under probate law in most jurisdictions, interest is a permitted expense. And, generally, interest on a loan used to avoid a forced sale or liquidation is considered “actually and necessarily incurred.”

Read More

Topics: T&E TALK

T&E TALK: Unleash the Benefits of a Nonspringing Power of Attorney

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

Estate planning typically focuses on what happens to your children and your assets when you die. But it’s equally important to have a plan for making critical financial and medical decisions if you’re unable to make those decisions yourself. A crucial component of this plan is the power of attorney (POA) — specifically, a nonspringing POA.

POA Defined

A POA is a document under which you, as “principal,” authorize a representative to be your “agent” or “attorney-in-fact” to act on your behalf. Typically, separate POAs are executed for health care and property.

A POA for health care authorizes your agent — often, a spouse, child, or other family member — to make medical decisions on your behalf or consent to or discontinue medical treatment when you’re unable to do so.

Read More

Topics: T&E TALK

T&E TALK: Should you Name a Trust as IRA Beneficiary?

Posted by Scott T. Ditman, CPA/PFS on Nov 26, 2018 10:20:00 AM

An IRA is a popular vehicle to save for retirement, and it can also be a powerful estate planning tool. Some people designate a trust as beneficiary of their IRAs, but is that a good idea? The answer: possibly.

IRA Benefits

The benefit of an IRA is that your contributions can grow and compound on a tax-deferred basis for many years. The longer you leave the funds in the IRA, the greater the potential growth, because taxes aren’t taking a bite out of the account. If you don’t need to tap your IRA funds during your life — other than required minimum distributions (RMDs) — you can stretch out its benefits even longer by designating your spouse or child as beneficiary.

Read More

Topics: T&E TALK

T&E TALK: Revise Your Estate Plan to Reflect Life Changes During the Past Year

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

Your estate plan shouldn’t be a static document. It needs to change as your life changes. Year end is the perfect time to check whether any life events have taken place in the past 12 months or so that affect your estate plan.

And the plan should be reviewed periodically anyway to ensure that it still meets your main objectives and is up to date.

When Revisions Might be Needed

What life events might require you to update or modify estate planning documents? The following list isn’t all-inclusive by any means, but it can give you a good idea of when revisions may be needed:

Read More

Topics: T&E TALK

T&E TALK: Intellectual Property Requires Careful Estate Planning

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

If your estate includes forms of intellectual property (IP), such as patents and copyrights, it’s important to know how to address them in your estate plan. Although these intangible assets can have great value, in many ways they’re treated differently from other property types.

2 Estate Planning Questions

For estate planning purposes, IP raises two important questions:

  1. What’s it worth? and
  2. How should it be transferred?

Valuing IP is a complex process, so it’s best to obtain an appraisal from an experienced professional.

Read More

Topics: T&E TALK

T&E TALK: Be Cautious when including Employees in your Estate Plan

Posted by Scott T. Ditman, CPA/PFS on Nov 5, 2018 12:09:23 PM

If you’re the owner of a small business, you may think of your tight-knit group of employees as a family. If you wish to include them as beneficiaries in your estate plan, it’s critical to be aware of possible unintended tax consequences.

Unraveling the (tax) Code

Generally, money or other property received by gift or inheritance is excluded from the recipient’s income for federal tax purposes. But there’s an exception for gifts or bequests to employees: Under Internal Revenue Code Section 102(c), the exclusion doesn’t apply to “any amount transferred by or for an employer to, or for the benefit of, an employee.”

Read More

Topics: T&E TALK

T&E TALK: Tenancy-in-Common - A Valuable Tool for Real Estate Investments

Posted by Scott T. Ditman, CPA/PFS on Oct 29, 2018 7:00:00 AM

If you hold significant real estate investments, tenancy-in-common (TIC) ownership can be a powerful and versatile estate planning tool. A TIC interest is an undivided fractional interest in property. The property isn’t split into separate parcels. Rather, each TIC owner has the right to use and enjoy the entire property.

TIC in Action

An individual TIC can’t sell or lease the underlying property, or take other actions with respect to the property as a whole, without the other owners’ consent. But each owner has the right to sell, mortgage, or transfer the TIC interest. This includes the right to transfer the interest, either directly or in trust, to heirs or other beneficiaries.

Read More

Topics: T&E TALK

T&E TALK: A Qualified Disclaimer Lets Assets Bypass Your Estate

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

If you are about to receive an inheritance from a family member, you can use a qualified disclaimer to refuse the bequest. The assets will then bypass your estate and go directly to the next beneficiary in line. It’s as if the successor beneficiary, not you, had been named as the beneficiary in the first place.

But why would you ever look this proverbial gift horse in the mouth? For beneficiaries who already have large estates themselves, using a legally valid disclaimer can save gift and estate taxes, often while redirecting funds to where they ultimately would have gone anyway.

Read More

Topics: T&E TALK

T&E TALK: Educate your Children on Wealth Management

Posted by Scott T. Ditman, CPA/PFS on Oct 15, 2018 9:20:00 AM

If you’ve worked a lifetime to build a large estate, you undoubtedly would like to leave a lasting legacy to your children and future generations. Educating your children about saving, investing and other money management skills can help keep your legacy alive.

Teaching Approaches

There’s no one right way to teach your children about money. The best way depends on your circumstances, their personalities and your comfort level.

If your kids are old enough, consider sending them to a money management class. For younger children, you might start by simply giving them an allowance in exchange for doing household chores. This helps teach them the value of work. Opening a savings account or a CD, or buying bonds, can help teach kids about investing and the power of compounding.

Read More

Topics: T&E TALK

T&E TALK: Retiring Abroad? Review your Estate Plan in Advance

Posted by Scott T. Ditman, CPA/PFS on Oct 8, 2018 7:00:00 AM

If you dream of spending your golden years in a tropical paradise, a culture-rich European city or another foreign locale, it’s important to understand the potential tax and estate planning implications. If you don’t, you could be hit with some unpleasant surprises.

Avoiding the Pitfalls

If you’re a citizen of the United States, U.S. taxes will apply even after you move to another country. So, if your estate is large, you might be subject to gift and estate taxes in your new country and in the United States (possibly including state taxes if you maintain a residence in a U.S. state). You also could be subject to estate taxes abroad even if your estate isn’t large enough to be subject to U.S. estate taxes. In some cases, you can claim a credit against U.S. taxes for taxes you pay to another country, but these credits aren’t always available.

Read More

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.

SALT TALK: Hear an insider’s perspective on the business issues, legislative updates in state and local tax, and tax aspects behind today’s headlines.

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.

TAX TALK: Get an all-inclusive perspective on regulatory changes, industry issues, and trends from our team of multidisciplinary tax professionals – many of whom also hold J.D. and LL.M degrees.

Subscribe to Berdon Blogs

Recent Posts