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New York City was the first city to enact a PTE tax. Effective for tax years beginning on or after Jan. 1, 2022, an eligible city partnership or an eligible city resident S corporation may make the annual irrevocable New York City (NYC) PTE tax election. Any eligible city partnership and any eligible city resident S corporation that makes the New York State PTE tax election may make the NYC PTE election for the same taxable year. The NYC PTE tax is imposed at a flat rate of 3.876% (the highest NYC personal income tax rate) of city PTE tax income. Resident partners, members, or shareholders receive a credit against their personal income tax equal to their direct share of the NYC PTE tax.
See https://www.wealthmanagement.com/estate-planning/state-states-2022
Based on the authors’ experiences working with business-owning families, and interviews with approximately 30 women from those enterprises, they found three key factors that strongly influenced women’s paths to leadership: (1) early (and egalitarian) exposure to the business; (2) communication of inclusion as a family value; and (3) strong female role models in the family. In situations in which not all of these factors were present, however, success still occurred thanks to a disrupter.
Trusteeship of split-interest trusts such as CRTs can be complicated due to beneficiaries’ competing interests. The income beneficiary may seek to maximize a stable, tax-efficient income stream during their life, while the charity’s interest is in the long-term growth to maximize the remainder. Trustees of CRTs have a duty of loyalty to all trust beneficiaries with vested interests, including both the income beneficiary and the charitable remainder beneficiary. The trustee’s actions (including investment decisions) must take into consideration and balance the interests of both classes of beneficiaries.
See https://www.wealthmanagement.com/estate-planning/crt-trustee-six-pack
The assets in the policy for investment are held in separate accounts, not the general account of the insurance carrier, thereby protecting the assets from claims against the carrier, and the payout of the death benefit isn’t subject to income tax under Internal Revenue Code Section 101(a) (subject to the transfer-for-value rules). In addition, IRC Section 72(e) provides that any amounts received from a life insurance contract are considered first to come from the policyholder’s investment in the contract and to such extent are income tax free.
See https://www.wealthmanagement.com/estate-planning/understanding-private-placement-life-insurance
Not all trusts need professional trustees. Trusts that terminate on the happening of a particular event expected to occur in the near term wouldn’t necessarily need a professional trustee. It may be cost-prohibitive for trusts that hold corpus under $1 million worth of assets to have a professional trustee because the expense will just continue to dwindle the trust corpus over time. Alternatively, the trust may not be able to afford a professional trustee, even if one would be beneficial, if the trust holds illiquid assets such as non-voting interests in closely held businesses or undeveloped land and therefore doesn’t have the liquidity needed to pay a professional.
See https://www.wealthmanagement.com/estate-planning/choosing-professional-trustee
The special rules found in IRC Section 401(a)(9)(B)(iv) only apply to an inherited retirement account. If the surviving spouse rolls over the account into the surviving spouse’s own IRA (or elects or is deemed to elect to treat the account as their own), the rules applicable to all IRA owners apply. A later, rather than immediate, rollover, is often advantageous when the surviving spouse is initially (that is, at the time the spouse inherited the IRA) under age 59½ or if the surviving spouse is older than a decedent spouse who died well before their RBD.
See https://www.wealthmanagement.com/estate-planning/new-rules-inherited-iras-surviving-spouses
FinCEN has provided explicit rules with regard to how it will view beneficial ownership in the context of entities that are owned through trust structures. FinCEN will look through revocable trusts and single beneficiary trusts as well as many non-discretionary trusts.
In a typical CGA transaction, an individual (the donor) transfers cash or appreciated marketable securities to a charity, and the charity agrees in return to pay the donor a life annuity. The annuity is called a gift annuity because the initial present value of the annuity is less than the fair market value of the asset transferred, and thus the transaction has a gift element. The CGA is a contractual arrangement that involves a current gift to the charity for federal tax purposes. The transaction is typically subject to state and federal laws, including regulatory, tax and securities laws.
Too frequently, planners steer clients toward a so-called “silent trust” to try and address the settlor’s fear of leaving too much wealth for descendants. The term “silent trust” refers to a trust that limits or eliminates the beneficiaries’ rights to receive information about the trust for a period of time, such as on attaining a certain age or for an individual’s lifetime. Silent trusts have many pitfalls that can result in administrative dilemmas and harmful effects on beneficiaries.
See https://www.wealthmanagement.com/estate-planning/letting-go-dead-hand
Individual giving represents the largest percentage—64%—or $319.04 billion. Over the past 40 years individual giving grew an annualized average of 4.9%. In 2022, however, giving by individuals declined by 6.4%.
In recent years, a subset of individual gifts called “mega-gifts” (defined as gifts of $450 million and higher) has been tracked. In 2022, mega-gifts totaled nearly $14 billion and represented almost 5% of total giving for the second year.
See https://www.wealthmanagement.com/estate-planning/charitable-giving-trends-brief-overview
ING trusts are non-grantor irrevocable trusts sitused in a no-income tax trust state, thus allowing a taxpayer to avoid state income taxes so long as the ING trust doesn’t have a resident trustee in a client’s high income tax resident state. The trust grantor generally has limited rights over the principal and income of the trust. Additionally, because the ING trust is an incomplete gift trust, it won’t be considered a taxable gift for federal gift tax purposes. As mentioned, ING trusts are generally sitused in no-income tax trust states; consequently, they’re named AKING (Alaska), DING (Delaware), NING (Nevada), SDING (South Dakota) and WING (Wyoming). New York passed legislation in 2014 to treat ING trusts as grantor trusts, thus eliminating the state income tax savings on ING trusts for New York residents. California recently passed retroactive legislation on July 10, 2023 to treat ING trusts as grantor trusts, thereby eliminating the ability of a California resident to save California state income taxes.
See https://www.wealthmanagement.com/estate-planning/tips-pros-importance-state-taxes-estate-planning
