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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: Received an Inheritance? Beware IRD Liability

Posted by Scott T. Ditman, CPA/PFS on May 14, 2018 9:24:11 AM

Most people are genuinely appreciative of inheritances. But sometimes it may be too good to be true. While inherited property is typically tax-free to the recipient, this isn’t the case with an asset that’s considered income in respect of a decedent (IRD). If you inherit previously untaxed property, such as an IRA or other retirement account, the resulting IRD can produce significant income tax liability.

What is IRD?

IRD is income that the deceased was entitled to, but hadn’t yet received, at the time of his or her death.  It is included in the deceased’s estate for estate tax purposes, but not reported on his or her final income tax return, which includes only income received before death.

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T&E TALK: Blended Family? Here are Four Estate Planning Techniques

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

Today, it’s not unusual for a family to include children from prior marriages. These “blended” families can create estate planning complications that may lead to challenges in the courts after your death.

Fortunately, you can reduce the chances of family squabbles by using techniques designed to preserve wealth for your heirs in the manner you want, with a minimum of estate tax erosion, if any. Here are four examples:

  1. Will. Your will generally determines who gets what, when, where, and how. It may be combined with “inter vivos trusts” established during your lifetime or be used to create testamentary trusts, or both. While you can include a few tweaks for your blended family through a codicil to the will, if the intended changes are substantive — such as removing an ex-spouse and adding a new spouse — you should meet with your estate planning attorney to have a new will prepared.
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Topics: T&E TALK

T&E TALK: Estate Planning Strategies for Non-U.S. Citizens

Posted by Scott T. Ditman, CPA/PFS on Apr 30, 2018 7:01:00 AM

Non-U.S. citizens face some estate planning challenges when it comes to taxes. If you’re a U.S. resident, but not a citizen, the IRS treats you similarly to a U.S. citizen, with a few exceptions. But, if you’re a nonresident alien, the tax treatment of your estate will be significantly different.

Understanding Residency

IRS regulations define a U.S. resident for federal estate tax purposes as someone who had his or her domicile in the United States at the time of death. One acquires a domicile in a place by living there, even briefly, with a present intention of making that place a permanent home.

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Topics: T&E TALK

T&E TALK: A Total Return Unitrust (TRU) May Help Maintain Family Harmony

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

A traditional trust can sometimes create a conflict between the lifetime and remainder beneficiaries. For example, investment strategies that provide growth that benefits remainder beneficiaries can leave lifetime beneficiaries with little or no annual payouts. This makes it more difficult for your estate plan to achieve your objectives and places your trustee in a difficult position. A total return unitrust (TRU) may offer a solution.

A TRU frees the trustee to employ investment strategies that maximize growth (total return) for the remainder beneficiaries without depriving lifetime beneficiaries of income. Rather than pay out its income to the lifetime beneficiary, a TRU pays out a fixed percentage (typically between 3% and 5%) of the trust’s value, recalculated annually, regardless of the trust’s earnings.

Considerations when Creating a TRU

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Topics: T&E TALK

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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Topics: T&E TALK

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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Topics: T&E TALK

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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Topics: T&E TALK

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

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