What are UTMA and UGMA accounts? Are there better alternatives? Read on to learn more about these accounts, their drawbacks, and better alternatives.What are UGMA and UTMA Accounts? … [Read more...]
ABLE Accounts
An ABLE account is a great strategy for someone who became disabled by age 26. An ABLE account may be income tax-free. It has other unique benefits for a disabled person. Read on to learn more about the ABLE account and how it can help.ABLE Accounts … [Read more...]
State Income Taxation of Nongrantor Trusts
As I noted in a prior article, states are all over the board on their income taxation. An individual in a state with a high state tax rate could use a nongrantor trust to hold some of their income-producing assets and thereby avoid state income taxation on the income from those assets.Briefly, trusts may be taxed as grantor trusts or nongrantor trusts. A grantor trust is taxed directly to the grantor, so this type of trust doesn’t help if you’re trying to avoid your state of residence’s … [Read more...]
State Income Taxation
States are all over the board in their taxation of income. Some tax at a low rate, some tax at a high rate, and some don’t tax at all. Read on to learn more about state income taxation and how you could avoid it.Everyone knows (or should know) that the federal government taxes the income you earn. But, depending where you live and how you earn money, states may tax your income, too.States run the gamut in the income taxation of individuals. Seven states don’t tax you at all: Alaska, … [Read more...]
Beneficiary Designations Aren’t a True Substitute for a Trust
TOD (Transfer on Death) designations, POD (Pay on Death) designations, and beneficiary designations can be useful in the right circumstances. Each of these tools allows for an automatic transfer to the named beneficiary at the death of the owner. But these tools can have a few shortfalls. First, if the named person predeceases the owner, typically it will not be effective to transfer the assets. Sometimes, you could name a contingent beneficiary and then it would go to that person. But, if there … [Read more...]
Nongrantor Trusts Can Be Very Useful in Certain Situations
A trust may be taxed as either a grantor trust or a nongrantor trust. Each type of trust has advantages and disadvantages. This article examines a nongrantor trust and situations in which it might be useful.Unlike a grantor trust, which is taxed to the grantor, a nongrantor trust is taxed as its own separate taxpaying entity. The trustee of the trust has the trust file its own tax return, Form 1041. On that return goes all the trust’s items of income and expense. The nongrantor trust has its … [Read more...]
Proposed Regulations Address “Clawback” Issue
The Tax Cuts and Jobs Act temporarily doubled the amount which can be given free of tax. However, that amount reverts to the permanent, undoubled amount in 2026. The estate tax ordinarily includes prior taxable gifts and then applies the exclusion to the total. However, in 2026 or later, this could result in a tax on amounts which weren’t taxable when gifted. This issue is the “clawback.” New Proposed Regulations resolve this issue. What's New Each person has a permanent exclusion amount of $5 … [Read more...]
How Are Trusts Taxed?
Trusts can be very useful vehicles to control assets during life and after death. During life, they can be especially helpful to control assets during periods of disability. After death, a trust can provide asset protection, remarriage protection, asset management, and many other benefits which might not be available otherwise. Grantor Trusts Generally, trusts are income taxed in two different ways, as “grantor” trusts or “nongrantor” trusts. A grantor trust is one that is taxed to the grantor … [Read more...]
Grantor Trusts Provide Flexibility and Ease
A trust may be taxed as either a grantor trust or a nongrantor trust. Each type of trust has advantages and disadvantages. This article examines a grantor trust and situations in which it might be useful.A prior blog discussed the taxation of trusts generally and that they could be taxed as grantor trusts or nongrantor trusts. This blog will focus on the advantages and disadvantages of taxation as a grantor trust.A grantor trust is one that is taxed to the grantor (or other substantial … [Read more...]
Selecting an Agent
Choosing the right Agent under a Power of Attorney is one of the most important choices. This article discusses the qualities of an ideal Agent and qualities to avoid in selecting an Agent. Read on to learn more.A Secret Agent may be very important to protecting the nation. Your Agent is just as important for your protection. An Agent is the person who makes financial decisions for you under a Financial Power of Attorney or makes medical decisions for you under a Health Care Power of … [Read more...]
