October 24, 2014 –
Family Wealth Compass: IRA rollovers; new NY estate law; trusts | October 2014

Here is your copy of the most recent Family Wealth Compass.

This publication offers a timely roundup of estate and trust planning tips, information and news, courtesy of Gunster’s private wealth services attorneys; please contact any team member for more information.

In this latest issue, you’ll find information on the following topics:

Only 1 IRA rollover per year

Beginning January 1, 2015, the IRS will begin enforcing the Tax Court’s holding in Bobrow v. Commissioner, which limits taxpayers to one tax-free, 60-day rollover per 12-month period, regardless of the number of IRAs owned.

For the remainder of 2014, all distributions and rollovers completed within 60 days will be allowed under Publication 590.

New York ‘cliff tax’ becomes law

If you have not already moved out of New York, now may be the time.

Recently enacted changes to New York trust and estate tax law are expected to provide some tax relief for moderately sized estates, but will negatively affect high net worth taxpayers who will see an increase in estate and income taxes.

Get more details about what’s changed.

Major changes in Maryland

Maryland has joined the ranks of states that have increased its estate tax exemption to align with the federal estate tax equivalent.

This appears, on its face, to be a major win for Maryland residents. However, Maryland is also one of only two states that still have an inheritance tax. This means that even if your Maryland estate incurs no estate tax, your estate may still be left holding the bag. Read more.

Bypass trusts: still useful

These days, portability allows a surviving spouse to benefit from his or her deceased spouse’s unused federal estate tax exemption amount at death without the need for a bypass trust.

Even so, bypass trusts can still be a useful part of your estate plan. In addition, unlike portability, no filing is required to effectuate a bypass trust.

Read more about the advantages (and a few disadvantages) of bypass trusts.

The important role of trusts

Trusts can play an important role in estate planning, both for high net worth and more moderate estates.

Trusts can be used to minimize the impact of income and estate taxes, such as reducing the tax burden in states with gift, inheritance and estate taxes. Family foundation trusts or charitable remainder trusts can be used as tax shelters as part of a charitable giving plan to reduce estate taxes or to receive a current income tax deduction. Naming a trust as the beneficiary of an IRA or 401(k) distributions after death increases flexibility, may reduce income taxes and provides a mechanism to control how assets pass to a beneficiary.

There are also nontax planning benefits to trusts. For example, revocable living trusts can be used to manage assets in the event of incapacity. Trusts can also be used to control the distribution of wealth for multiple generations.

Read more about whether a trust vehicle is appropriate for your estate planning needs.

Read the entire October 2014 Family Wealth Compass newsletter

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