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: Have you made your Burial Wishes Clear?

Posted by Scott T. Ditman, CPA/PFS on Aug 13, 2018 7:00:00 AM

It may be difficult to contemplate, but funeral arrangements are a critical component of your estate plan. Failing to clearly communicate your wishes for the disposition of your remains can lead to tension, disputes, and even litigation among your family members during what is already a difficult time.

Issues to Address

The methods for expressing these wishes vary from state to state, and may include a provision in your will, language in a health care proxy or power of attorney, or a separate form specifically designed for this purpose.

Whichever method you use, it should, at a minimum, state:

  • Whether you prefer burial or cremation,
  • Where you wish to be buried or have your ashes interred or scattered (and any other special instructions), and
  • The person you’d like to be responsible for making these arrangements. Some people also request a specific funeral home.
Read More

Topics: T&E TALK

T&E TALK: A Charitable Gift Annuity can Provide Multiple Benefits

Posted by Scott T. Ditman, CPA/PFS on Aug 6, 2018 7:00:00 AM

If you are charitably inclined, consider the benefits of a charitable gift annuity. It can combine the advantages of an immediate income tax deduction and a lifetime income stream. Moreover, it allows you to support a favorite charity and reduce the size of your future taxable estate.

What is a Charitable Gift Annuity?

A charitable gift annuity is an arrangement in which you make a gift of cash or other property to a charity in exchange for a guaranteed income annuity for life. This is similar to buying an annuity in the commercial marketplace, except that you potentially can claim an immediate charitable deduction for the excess of the value of the property over the value of the annuity.

Read More

Topics: T&E TALK

T&E TALK: Does Your Estate Planning Account for Digital Assets?

Posted by Scott T. Ditman, CPA/PFS on Jul 30, 2018 7:00:00 AM

Even though you can’t physically touch digital assets, they’re just as important to include in your estate plan as your material assets. Digital assets may include online bank and brokerage accounts, digital photo galleries, and even email and social media accounts.

If you die without addressing these assets in your estate plan, your loved ones or other representatives may not be able to access them without going to court — or, worse yet, may not even know they exist.

Virtual Documents in Lieu of Hard Copies

Traditionally, when a loved one dies, family members go through his or her home to look for personal and business documents, including tax returns, bank and brokerage account statements, stock certificates, contracts, insurance policies, loan agreements, and so on. They may also collect photo albums, safe deposit box keys, correspondence and other valuable items.

Today, however, many of these items may not exist in “hard copy” form. Unless your estate plan addresses these digital assets, how will your family know where to find them or how to gain access?

Read More

Topics: T&E TALK

T&E TALK: Basis Consistency Rules in Play When Administering an Estate or Inheriting Property

Posted by Scott T. Ditman, CPA/PFS on Jul 23, 2018 7:00:00 AM

When it comes to tax law changes and estate planning, the substantial increases to the gift and estate tax exemptions under the Tax Cuts and Jobs Act are getting the most attention these days. But a tax law change enacted in 2015 also warrants your attention.

That change generally prohibits the income tax basis of inherited property from exceeding the property’s fair market value (FMV) for estate tax purposes. Why does this matter? Because it prevents beneficiaries from arguing that the estate undervalued the property and, therefore, they’re entitled to claim a higher basis for income tax purposes. The higher the basis, the lower the taxable gain on any subsequent sale of the property.

Conflicting Incentives

Before the 2015 tax law change, estates and their beneficiaries had conflicting incentives when it came to the valuation of a deceased person’s property. Executors had an incentive to value property as low as possible to minimize estate taxes, while beneficiaries had an incentive to value property as high as possible to minimize capital gains, should they sell the property.

The 2015 law requires consistency between a property’s basis reflected on an estate tax return and the basis used to calculate gain when it’s sold by the person who inherits it. It provides that the basis of property in the hands of a beneficiary may not exceed its value as finally determined for estate tax purposes.

Read More

Topics: T&E TALK

T&E TALK: A SLAT can serve as a Financial Backup Plan

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

The most effective estate planning strategies often involve the use of irrevocable trusts. But what if you’re uncomfortable placing your assets beyond your control? What happens if your financial fortunes take a turn for the worse after you’ve irrevocably transferred a sizable portion of your wealth?

If your marriage is strong, a spousal lifetime access trust (SLAT) can be a viable strategy to obtain the benefits of an irrevocable trust while creating a financial backup plan.

Indirect Access

A SLAT is an irrevocable trust that authorizes the trustee to make distributions to your spouse if a need arises. Like other irrevocable trusts, a SLAT can be designed to benefit your children, grandchildren, or future generations. You can use your lifetime gift tax and generation-skipping transfer tax exemptions (currently, $11.18 million each) to shield contributions to the trust, as well as future appreciation, from transfer taxes. And the trust assets also receive some protection against claims by your beneficiaries’ creditors, including any former spouses.

Read More

Topics: T&E TALK

T&E TALK: Fortify your Estate Plan Against “Undue Influence” Claims

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

You should expect the declarations in your will to be carried out, as required by law, and, usually, that’s exactly what happens with wills.  However, it’s possible your will could be contested and your true intentions defeated if someone is found to have exerted “undue influence” over your decisions.

What is Undue Influence?

Undue influence is an act of persuasion that overcomes the free will and judgment of another person. It may include exhortations, insinuations, flattery, trickery, and deception.

Frequently, undue influence happens when an elderly individual, who may or may not have all of his or her bearings, is convinced to change provisions in a will or otherwise suddenly rewards another person, such as a caregiver.

Conversely, not all influence is “undue.” For instance, it’s perfectly reasonable for a child or close friend to advise an elderly person. It’s usually up to a court to decide if the “suggestion” constitutes undue influence.

Read More

Topics: T&E TALK

T&E TALK: Self-Canceling Installment Notes have Pros and Cons

Posted by Scott T. Ditman, CPA/PFS on Jul 2, 2018 7:00:00 AM

Many estate planning techniques are intended to minimize or even eliminate gift and estate taxes when transferring assets to family members. Sometimes, the most powerful techniques also have a significant drawback: mortality risk.

Example

You may have to outlive the term of a trust to realize its tax benefits. A self-canceling installment note (SCIN) eliminates mortality risk, so it may be appropriate for anyone in poor health who isn’t expecting to reach his or her actuarial life expectancy. But it has other potential downsides.

Read More

Topics: T&E TALK

T&E TALK: Naming a Minor as Beneficiary Can Lead to Unintended Outcomes

Posted by Scott T. Ditman, CPA/PFS on Jun 25, 2018 7:01:00 AM

A common estate planning mistake is to designate a minor as beneficiary — or contingent beneficiary — of a life insurance policy or retirement plan. While making your young child the beneficiary of these assets may seem like an excellent way to provide for him or her in the case of your untimely death, doing so can have significant undesirable consequences.

Not Per Your Wishes

The first problem is that insurance companies and financial institutions generally won’t pay large sums of money directly to a minor. What they’ll typically do in these situations is require costly court proceedings to appoint a guardian to manage the child’s inheritance. And there’s no guarantee the guardian will be someone you’d choose.

Read More

Topics: T&E TALK

T&E TALK: You can Repair a “Broken” Trust with the Proper Tools

Posted by Scott T. Ditman, CPA/PFS on Jun 18, 2018 12:18:38 PM

An irrevocable trust has long been a key component of many estate plans. But what if it no longer serves your purposes? Is it too late to change it? Depending on applicable state law, you may have options to fix a “broken” trust.

How Trusts Break

There are several reasons a trust can break, including:

Changing Circumstances. A trust that works just fine when it’s established may no longer achieve its original goals if your family circumstances change — births, deaths, divorce, etc.

New Tax Laws. Many trusts were created when gift, estate, and generation-skipping transfer (GST) tax exemption amounts were relatively low. Today, however, the exemptions have risen to $11.18 million, so trusts designed to minimize gift, estate, and GST taxes may no longer be necessary.  And with transfer taxes out of the picture, the higher income taxes often associated with these trusts — previously overshadowed by transfer tax concerns — become a more important factor.

Read More

Topics: T&E TALK

T&E TALK: For the Charitable, Consider a Donor-Advised Fund

Posted by Scott T. Ditman, CPA/PFS on Jun 11, 2018 7:00:00 AM

If you make sizable gifts to charitable causes, you can also realize personal rewards, and may be able to claim a deduction on your tax return. However, once you turn over the money or assets, you generally have no further say on how they’re used. You can exercise greater control over your charitable endeavors using a donor-advised fund (DAF). Bear in mind that under the Tax Cuts and Jobs Act, you must itemize to benefit from the charitable contributions deduction.

Setting Up a DAF

As the name implies, your recommendations are integral to a DAF. First, you contribute to a fund typically managed by an independent sponsoring organization or an arm of a reputable financial institution. The minimum contribution generally is $5,000. In exchange for handling the management of the fund, the financial institution or organization usually charges an administrative fee based on a percentage of the deposit.

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