Here’s a brief glance at what you’ll find in the July/August issue…
Can a broken trust be fixed?
An irrevocable trust has long been a key component of many estate plans. But what if it no longer serves its original purpose? Is it too late to change it? Depending on applicable state law, the trust’s owner may have several options for fixing a “broken” trust. This article explains how a trust can become broken and possible solutions to fixing it. But a sidebar warns of the federal tax consequences that may be associated with making changes to a trust.
Keep it in the family- Use an intrafamily loan to cover estate taxes
An intrafamily loan is one option if an estate doesn’t have the liquidity to pay estate taxes or other expenses. A benefit of using an intrafamily loan is that, if it’s properly structured, the estate can deduct the full amount of interest upfront. Doing so reduces the estate’s size and, thus, its estate tax liability. This article explores the ins and outs of using an intrafamily loan.
Tax Court: Trust can materially participate in a business
In a landmark 2014 case, the U.S. Tax Court opened the door to significant tax savings for certain trusts. In Frank Aragona Trust v. Commissioner, the court held that a trust can materially participate in a trade or business and even qualify as a “real estate professional.” This article explains the ruling and how it affects estate plans that include trusts that own real estate or other passive business interests.
Estate Planning Red Flag- You’ve included employees in your will or trust
Employers may think of their employees as family. But if an employer wishes to provide for his or her employees in his or her estate plan, unintended tax consequences may result. This brief article details an exception for gifts and bequests to employees.
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