Remember when you were a kid and you had a special toy. Instead of keeping it in your room, you decide to keep it at your friend’s house across the street or somewhere hidden in your house. Why? Well, maybe it’s safer there because you have little siblings at home who might have played with … Read more
Managing assets and values for clients whose net worth is close to the federal estate tax exemption can be a challenge. Fortunately, there are practical ideas that you can implement to manage volatility and plan for estate tax.
In today’s digital age, content creation and marketing are crucial for businesses and individuals alike. However, creating relevant and engaging content can be time-consuming and challenging, especially for those who lack the necessary skills or resources. Fortunately, advances in artificial intelligence (AI) technology have made it possible to streamline this process and generate high-quality content … Read more
As much as we like to think that our money decisions are purely rational, the truth is that emotions can often come into play. Whether it’s fear, greed, or simply the desire for instant gratification, our emotions can cause us to make choices that aren’t always in our best financial interest.
Estate planning can be complex, but it’s an important part of managing your assets and ensuring your loved ones are taken care of when you’re gone. With the Tax Cuts and Jobs Act (TCJA) set to sunset in the coming years, now is the time to review your existing estate plans and take advantage of the higher exemption amounts while they are still available. In this post, we’ll discuss why timely action is key when it comes to maximizing your estate plan’s benefits.
Previously, I wrote about what I called the Secure Stretch Trust as a possible option to stretch IRA distributions beyond 10 years under the SECURE Act. I also previously wrote about how trusts may be the best beneficiaries of IRAs under the SECURE Act. And … And talked about all of that on the Wealth … Read more
Estate planning can be a daunting, though important, topic. And, it is a topic that matters to almost everyone. Yet, so many people still misunderstand it, despite the fact that the internet is awash with content on point. To get you on the right track, here are five things people consistently get wrong, and how … Read more
If you are a regular listener of the Wealth & Law Podcast, then you’ve probably heard our special guests in the background—that is, the family pets. Our wonderful dogs and cats wish they could make more of an appearance on the show, but alas, we’ve got to get down to business at some point. But … Read more
A significant amount of recent commentary has been devoted to Robinhood, the phone app that lets people trade stocks for free. It is heralded as breaking down barriers to entry for marginalized communities. Others criticize that it has targeted under educated individuals and it has been accused of being the cause of at least one … Read more
One of the Biden tax proposals is actually a two for one deal. Increase ordinary income rates to 39.6% and raise capital gains rates to ordinary income rates on income over $1,000,000. So does this mean well paid taxpayers will immediately pay more tax? Not necessarily. With IRAs (and other defined compensation plans) we already … Read more
The tax benefit of community property is that at the first spouse’s death, ALL of it receives a new tax basis. This eliminates all accrued but unrealized capital gains (and losses). Even if the property is only in the name of one spouse, the surviving spouse receives this benefit. In contrast, jointly owned (but non-community) … Read more
As in most difficult economic times, commercial deferred annuities are being shopped as secure sources of long-term investment returns. But are they worthwhile? While there are no bright line rules, and this is in no way an attempt to give investment advice, from a legal perspective, in most instances the answer is “no.” I’ll break … Read more
Even non-US citizens who don’t want to be subject to the US tax system can sometimes be pulled into it. This is largely due to the fact that, based on a mathematical test, being in the US for more days than the US tax system deems appropriate can make that person a US “resident” for … Read more
After the SECURE Act, most IRA beneficiaries are required to withdraw the balance of the account within 10 years after the owner’s death. The details of those rules can be found in my prior post here. In that post, I also introduced the concept of using an Accumulation Trust (i.e. a trust as beneficiary of … Read more
We are living in a difficult moment. Businesses, families, and individuals are struggling because of the COVID-19 pandemic. And, the struggles are largely not anyone’s fault. Despite the difficulties, there are rays of light to be found from a planning perspective. I previously wrote about five savings tips when valuations and interest rates are low, … Read more
So you’re an influencer (or wannabe). That’s pretty great. It probably means you have a knack for understanding what people (at least your group) enjoy, you know how to match the audience, make adjustments, think creatively, perform, and, yes, work (not everyone is an overnight sensation). Assuming you have a robust following, you may even … Read more
The CARES Act, which went into law on March 27, 2020, has several provisions that can supplement charitable giving at almost any level. Largely, this is accomplished by granting a donor a more favorable income tax charitable deduction for gifts to certain charities. A tax deduction then reduces the donor’s taxable income, which in turn … Read more
Although economic downturns, such as the one we are currently experiencing, can have real hardships for many people–there are silver linings for those fortunate to take advantage of them. Reduced values combined with lower interest rates create five (among other) key ways that families can gain advantages in dark economic times. Sell the Family Business … Read more
Many clients are asking about the Payroll Protection Program (PPP). Here’s a slide deck to help out (based on April 3, 2020 guidance). Payroll Protection Program for Family Business from Brent Nelson
The COVID-19 outbreak has shown us that now—more than ever—we need to protect the health and safety of our loved ones. In addition to practicing social distancing and washing your hands, you can also protect yourself, family, and property by creating (or reviewing your current) estate planning documents. For those that haven’t created an estate … Read more
COVID-19 is a public health issue that goes far beyond the bounds of this blog. However, focusing only on the economic side of the equation, it is clear the SARS-COV 2 virus, and the needed response to contain it, have had and will have significant effects on the economy. As reported in the Atlantic on … Read more
As I previously described, in Part 1, under the Delinquent Filing Procedures, a taxpayer with unreported foreign accounts or assets can file the foreign reports late without any penalty. In order to qualify for that treatment, the taxpayer must have had reasonable cause, based on the standards for reasonable cause in various Code provisions and … Read more
Three cases were recently decided against taxpayers that shed light on the hurdles Americans must climb if they have unreported foreign accounts or assets. As I have previously described here (https://www.swlaw.com/publications/legal-alerts/2586), the IRS has three programs available to help taxpayers come clean, and avoid the full force of civil and potentially criminal penalties for failure … Read more
Planning for an estate that spans multiple international jurisdictions is challenging. One of the hardest aspects is to create a structure that allows family members to control the family assets in each jurisdiction without unnecessary disruption from incapacity or death. Not every country recognizes trusts as a legal entity. Even when trusts are recognized in … Read more
I have previously written about the complexity that the Secure Act has introduced to trust beneficiaries here and here. I also previously suggested that under the current rules, naming a trust that can flip between a Conduit Trust and an Accumulation Trust, depending on the age of the IRA owner and the classification of the … Read more
There are two schools of thought on naming at trust as a beneficiary of an IRA: (1) NEVER DO IT, and (2) do it if it meets your goals. The First camp lives and dies on the belief that naming a trust accelerates distributions from the IRA–thus more tax sooner, and that is usually bad. … Read more
The SECURE Act became law on December 20, 2019. It changes quite a few of the rules relating to retirement plans, but there are really FIVE major changes that effect individuals. Here they are: Repeals Age Limit on Traditional IRA Contributions. It used to be that contributions to traditional (non-Roth) IRAs were prohibited after age … Read more
It is easy to complain about control freaks. They cling onto projects, micro manage, don’t trust other people, and can be over bearing. But, being a control freak is a good thing in estate planning. It is one aspect of life in which losing control to those you did not hand pick is a poor … Read more
The 2017 Tax Cuts and Jobs Act changed the rules dramatically with respect to S corporations in one particular: non-citizen non-resident shareholders. Before the change, non-citizen non-residents of the U.S. could not own S corporation stock. Period. Even marrying into S corporation stock, or getting it from a deceased relative, would violate the rule for … Read more
As the year draws closer to an end, many parents will consider making gifts to their adult children. Part of that gift giving conversation should include a discussion of how to manage money and how to responsibly invest. Before making gifts of any significance, parents could consider the following three key elements of successful financial … Read more
There was a time, and there may well be one again (see Bernie’s plan), when each person did not have an $11.4 million (in 2019) federal gift tax exclusion amount. In 1995 the federal gift tax exclusion amount was $600,000. That is significant, because the U.S. Tax Court recently confirmed in William Cavallaro v. Commissioner … Read more
When international estate tax rules are layered onto common errors in Irrevocable Life Insurance Trusts (“ILITs”), the consequences can be dire. PLR201941008 illustrates one common drafting mistake that can cause havoc for cross-border families. ILITs have been a mainstay in U.S. estate planning for decades. The premise of the trust is that it can accomplish … Read more
An estate plan is a snap shot. It takes into account the facts and circumstances that one knows or anticipates at a particular moment in time. Although estate planning professionals preparing documents try to think about what could happen in the future and control for unanticipated circumstances, it is an inexact art. There is no … Read more
Failure to count days. Canadians who spend time in the United States, absent an exception, must be mindful that the number of days they spend in the United States could make them tax residents here. The result of becoming a United States tax resident is that all of the individual’s worldwide income is taxed here … Read more
The rules related to withdrawals of IRA funds (and other funds in defined contribution accounts) are strict and often harsh to the unwary. On September 19, 2019, the U.S. Tax Court issued an Order in Rosenberg v. Commissioner that emphasizes this point. As part of a divorce order, Mr. Rosenberg’s former spouse was ordered to … Read more
Personal and family wealth exist in a vast and complicated legal structure. Laws touch every aspect of wealth, often in ways that are surprising, or, at least, not well understood. From centuries olds laws, like those governing Wills, and modern laws, like the regulation of crypto currencies, the legal structure surrounding wealth is like an … Read more