For decades, Delaware has led as an innovative and flexible jurisdiction for establishing and administering personal trusts. There are five reasons to explore the First State as the premier location for your new or existing trust—even if you don’t reside in the state. Delaware is also a leader in providing “directed trusts,” which enable families to benefit from a trust without giving up control.
Resource Search
The legal qualifications for a trustee are simple: the person must be over the age of 18 and legally competent to manage his/her own affairs. The practical qualifications, however, are much more complicated. Most importantly, a trustee must have the skill set to properly administer the trust and meet the needs of the beneficiaries and must possess and exercise good judgment.
1031 Exchange, commonly known as like-kind exchange, can be a smart tax strategy for business owners who also own or invest in real estate.
Changes in the federal tax laws have provided a renewed focus on state income taxes and strategies available to minimize these taxes. While personal trusts have been used most commonly as estate and gift tax planning tools, they now have increased importance as vehicles for minimizing a family’s federal and state income tax liability. If you live in a high-tax state there may be opportunities to reduce or eliminate state taxes on some of your income by establishing a new trust in Delaware or moving an existing trust to the First State.
You have too much at stake to be caught unprepared, and your family is too important to be left in the lurch by an estate plan you didn’t realize that you had outgrown. If it has been a while since you have looked at your estate planning and settlement documents, it is time to perform a stress-test on your plan to ensure that none of the key components are missing or outdated. Performing this test regularly is time well-spent to protect your family from the unexpected, including an unanticipated incapacity and death.
Although it is flattering to be asked to be a trustee, you should give careful consideration about serving in this important role, as performing the responsibilities of a fiduciary can expose you to great personal liability, especially if you lack training. Learn from the common mistakes made by family members serving as trustees and the ways for a trustee to protect against the liability that is inherent when serving in a fiduciary role.
One of the most important, yet most forgotten, parts of estate planning is keeping track of who will benefit from those assets, including life insurance, which are not governed by your will. Providing for your family includes knowing which types of assets are not governed by your will; ensuring your assets are going to where you want them to go; and keeping your beneficiary designations updated.
A new U.S. Supreme Court ruling in the Kaestner case means that more out-of-state residents will be able to fully realize the benefits of Tennessee's progressive trust laws and zero income tax on non-residents. Previously, many states relied on the residence of a trust beneficiary as one of the criteria for taxing a trust. In essence, the new ruling makes that criteria alone unconstitutional.
IRS regulations’ restricting taxpayer’s ability to structure leveraged partnerships were drafted with the intent to eliminate leveraged partnerships through the use of what the IRS perceived as abuses of the debt allocation rules. As of January 3, 2017, when a taxpayer contributes property to a partnership, the Temporary Regulations treat all partnership liabilities (with limited exceptions) as non-recourse, even if the taxpayer is personally liable on some or all of the debt.
Given the uncertainty after the 2016 presidential election, it is critical to implement the best strategies to minimize taxes come April 15, 2017 (and beyond). While it is unclear which tax reforms will be pursued and what order, there are considerations and informational points—broken down by tax areas in a summary of planned changes—that will provide some education relevant to higher-income taxpayers.