Estate Planning

Other people’s money

Seemingly disparate services such as investment advisory, bill-paying, and estate planning all have a common denominator: the CPA’s involvement with other people’s money.

Boilerplate trust clauses

Many clients sign estate planning documents without paying much attention to the clauses they contain. One clause that few clients pay attention to is the one governing how that client’s incapacity could be determined—and therefore how the client could be removed from serving as a fiduciary or trustee. A high-profile

Avoiding the squeeze: Trusts, estates, and the new ATRA tax regime

The American Taxpayer Relief Act of 2012 raised the top income tax rate to 39.6%, and a new 3.8% tax on net investment income also applies beginning in 2013. Both taxes apply to trusts and estates with income in excess of $11,950 in 2013, in contrast to much higher thresholds for individuals. This new tax regime necessitates drafting wills and trusts to give executors and trustees maximum discretion so they can reduce these taxes.

Immediate year-end planning opportunity for existing CRTs

On Dec. 2, the Treasury Department issued final regulations addressing the 3.8% net investment income tax under Sec. 1411 (T.D. 9644). Regs. Sec. 1.1411-3 addresses estates and trusts, including charitable remainder trusts (CRTs). The final regulations include an additional accounting method to tax CRT distributions. Distributions of income from a

New portability rules: A cure for incomplete estate planning

Many CPAs are involved in representing estates of decedents who died in 2011 and 2012. In dealing with such estates, it is important to focus on the new Code provisions allowing portability of the decedent’s unused lifetime gift and estate exclusion amount to the surviving spouse. A failure to do

The 10 most powerful postmortem planning pointers for trusts and estates

After a client passes away, there is much more to do than just prepare a final Form 1040, U.S. Individual Income Tax Return. Taking control of the postmortem planning process can be a powerful way to save tax dollars for the decedent’s estate and family. Postmortem planning also applies to

Estate Planning Action Steps

CPAs should play a more significant role than they often do in facilitating, implementing and monitoring client estate plans. National Estate Planning Awareness Week, Oct. 17–23, is an ideal time to encourage clients to address planning. To download a sample client letter on estate planning, click here. Here are some

Estate Tax or Carryover Basis?

For decedents dying in 2010, Congress provided two systems of taxing estates and determining basis of their assets. Executors of those estates must determine the better course. To do so, especially for valuations of gross estates above the new $5 million exclusion, they must take many factors and considerations into

A Sea Change for Gift and Estate Planning

Martin Shenkman, Esq., CPA/PFS, is the author of numerous books and articles on tax and financial planning, including the AICPA-published Estate and Related Planning During Economic Turmoil, and with Steve R. Akers, Estate Planning After the Tax Relief and Job Creation Act of 2010: Tools, Tips, and Tactics. His firm,

Post-Death Estate Planning Issues for 2010

The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (2010 Tax Relief Act) (PL 111-312) revised tax law for estates of decedents dying in 2010, 2011 or 2012. The new rules apply for 2010 unless an executor elects to use prior law. Elections for 2010 decedents can

New Life for Charitable Lids

One common estate planning technique the IRS has opposed or blocked for years is “charitable lid planning.” This technique relies on “defined value” and “value adjustment” clauses or similar provisions in wills, deeds or other transfer documents to cap the transfer taxes on estates, gifts or generation-skipping trusts at some

Valuing Art for Tax Purposes

Even people who don’t collect art probably own a painting or sculpture or two. At some point, one of two things is likely to happen: One, the artwork will be given away, perhaps as a noncash charitable contribution for which the owner will claim an itemized deduction, or as a

In the Twilight of the EGTRRA

When the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA, PL 107-16) was enacted in 2001, almost no one seriously thought that one of its most important provisions would ever be given its full effect—the repeal of the federal estate and generation-skipping transfer (GST) taxes in 2010. However,

Study of Financial Picture Reveals Struggles, Risky Habits

A study examining personal financial habits shows many Americans are struggling to cover their mortgage and other monthly bills, don’t have rainy day funds, and have yet to do the math on how much money they’ll need to retire. Roughly 49% of those surveyed reported having trouble paying their monthly

Charting a Course: Estate Planning 2009–2011

This special report is published as a supplement to the July 2009 issue of The Tax Adviser. It looks at the status of estate, gift, and generation-skipping transfer taxes over the next few years.1 Current State of the Law In 2001, Congress enacted the Economic Growth and Tax Relief Reconciliation

CPA Financial Planners Assess New Risk Environment

Eighty percent of CPA financial advisers are strongly recommending a mix of growth and income securities for their clients, according to an online survey of members of the AICPA’s Personal Financial Planning Section. The survey, conducted between April 22 and June 4, showed that CPAs are re-evaluating their clients’ risk

Estate Planning: Time for a Tuneup

A CPA is in an excellent position to help clients address the issues of estate planning. CPAs are usually aware of the scope of their clients’ assets and often know something about family relationships, recent marriages, children, grandchildren and other key facts. They see their clients annually in connection with

Quick Points on Prenups

Premarital agreements (also known as prenuptial agreements, or “prenups” for short) involve elements of estate planning and divorce law. And because such agreements can center on finances and taxes, accountants should be aware of how they operate. WHEN A PRENUP MAY BE NEEDED Prenups aren’t just for rich people—they are

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