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Avoid These Top Ten Mistakes in Delaware Statutory Trusts
Delaware Statutory Trusts (often called “DST” but don’t confuse that with “deferred sales trust”) can be good solutions for certain very specific real estate tax planning purposes. How do you know if a Delaware Statutory Trust is right for your client’s situation? Consider Mark who owns $2 million of apartments in California. His basis is very low,…
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Did You Know This About Tariffs?
Fewer than half of Americans even claim to understand how tariffs work. Do you? If not, please don’t feel bad. I sat through at least one class in graduate school (at Stanford) on the subject of tariffs. That’s more, I suspect, than most people. And yet, when President Trump put them back in the headlines,…
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The End of the World?
Did you know the world almost ended in June? For real… The world as we know it may have come within hours of ending on June 29, 2024 when an asteroid, discovered only about one week before, passed closer to the earth than the moon is. A few hours difference in the timing, and the…
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Taxes – Still Time (Not Much) to Plan
Congress wants to lower your clients tax bill (it’s true)! For most high-net-worth clients, the best way to reduce their tax bill for 2024 is to employ one or more of the many tax-reducing techniques Congress has enacted to promote philanthropic activity. Ben Franklin said that only two things are certain: death and taxes. But…
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Income Accounting for Tax-Exempt Trusts
Section 664 of the Internal Revenue Code includes the rules for income paid from trusts that are tax exempt under the section. These rules are the so-called four-tier accounting system. This system lays out the basic rules for how distributions to the taxable beneficiaries of a tax-exempt asset diversification trust or a charitable remainder trust are…
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State Death Taxes: Don’t Get Blindsided!
Does your state impose a death tax, separate from estate taxes? All advisors to high net worth clients are aware that the US federal government imposes an estate tax on large estates. As of 2024, there is a lifetime exemption per person of $13.61 million. But not everyone is aware that 17 states (and the District of…
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Taxation of Complex Trusts
A complex trust is any trust that does not meet the conditions to be a simple trust. Simple TrustsA simple trust is a trust that must distribute all its income in the same year it receives the income. A simple trust cannot accumulate income, cannot distribute out of corpus (also called principal), and it may not distribute funds for…
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Escaping the Generation-Skipping Tax Trap
Do you have any clients who might get tripped up by the generation-skipping tax? If you do, or aren’t sure, please read on. The generation-skipping tax is an estate tax on steroids. It is essentially a double tax. Generation-skipping tax is imposed on gifts or other non-exempt transfers (the rules are complex, and we’re just…
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Grantor Trusts: What Good Are They?
If you are not sure what grantor trusts are, or when they might be used, this article is for you. We’ll discuss what grantor trusts are, their most common uses, and how they can be used to help people avoid or minimize estate and gift taxes. For most purposes, the key feature of a grantor…
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Trusts Part 3: SLATs and Asset Diversification Trusts, A Match Made in Heaven?
The scheduled sunsetting of the $14 million lifetime estate tax exemption presents a dilemma for some planners and clients. The dilemma is that many people with estates that will be taxable (when and if the $14 million exemption sunsets) are not comfortable giving away a large part of their wealth. “What if we need it?”…